Week 2 - Innovation concepts, processes and strategies (including open innovation and new
product development)
1.1 Introduction
Management of innovation and sustainability are becoming increasingly recognised as crucial
issues in the context of business policy and managerial decisions. These issues have the
potential to influence the legitimacy, continued existence, and overall competitive advantage
of a company in the market. It is being more acknowledged as a crucial driver of sustainable
business growth and a competitive advantage to incorporate innovation as an essential
component of a company's overall strategy.
1.2. Learning Outcomes
Upon the completion of this week of study you will be able to:
LO1. Identify and critically evaluate drivers of change, including opportunities to exploit
digital technologies, to support the transformation of organisational strategy and processes
LO.2 Synthesise theory and best practice to develop a critical understanding of how
organisations promote a culture of creativity and innovation
LO.3 Critically appraise and apply leadership strategies that manage change and
innovation and enable digital transformation
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Table of Contents
1.1 Introduction ............................................................................................................................. 1
1.2. Learning Outcomes................................................................................................................ 1
1.3 Innovation concepts, processes and strategies / Open Innovation and New Product
Development .................................................................................................................................. 2
1.4 Managing sustainability in companies / Sustainable innovation ........................................ 4
References ...................................................................................................................................... 6
1.3 Innovation concepts, processes and strategies / Open Innovation and New Product
Development
The concept of sustainability is becoming an increasingly significant factor for businesses to
take into consideration. It is not only essential for businesses to comply with laws and
regulations that promote corporate sustainability, but doing so has also developed into a
means for businesses to increase their level of competitiveness. Historically, in order to
produce competitive advantages, businesses have generally pursued what are known as
"closed innovation models," which focus on the resources and capabilities already present
within the company. The internal capacities of organisations are put to the test in a world
defined by fast shifting demands and high product complexity. As a result, corporations have
begun to explore other collaborative forms of innovation in order to meet these challenges.
This movement is known as open innovation, and it denotes that businesses open up their
innovation process in order to employ external expertise and share their ideas that are not
being exploited (Rauter et al., 2018, 2015).
There is an increasing amount of pressure being put on businesses to take into consideration
social and environmental concerns (Epstein, 2008). Companies are compelled to lessen their
negative impact on the environment and come up with inventive responses to the issues they
are currently facing as a result of laws, regulations, and the shifting needs of customers and
other stakeholders (Chang, 2017). Instead than merely serving as a compliance concern,
sustainability has emerged as a significant driver of competitive advantage (Baumgartner &
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Rauter, 2017). When it comes to the creation of new goods and
services, businesses have historically developed competitiveness by drawing on their own
resources and expertise (Chesbrough, 2003). However, the characteristics of the market, such
as rapidly shifting demands and increased product complexity, have caused businesses to
become aware of the limitations of their own internal knowledge and resources, which has led
to the necessity of searching for complementary resources that lie outside the boundaries of
the firm (Rauter et al., 2018). According to Chesbrough (2003), this developing pattern is
being referred to as open innovation. "...a model that implies that organisations can and
should use external ideas as well as internal ideas, both internal and external channels to
market, as they attempt to progress their technology," is one way to characterise open
innovation (2003, p. xxiv). Because innovative activities give businesses the ability to create
more environmentally friendly products and services, they are often cited as a primary factor
in organisations' overall progress toward sustainability (Achterkamp & Vos, 2006). However,
designing products that satisfy economic, social, and environmental requirements all at once
is a difficult problem that companies operating in isolation are now unable to handle
successfully ( Cillo et al., 2019).
The internally focused logic of the closed innovation model does not promote collaborative
efforts. Instead, it builds on a mentality that assumes sufficient competencies are available in-
house and that internally developed technologies should be protected from potential
competitors (Chesbrough, 2003). This prevents companies and industries from achieving
long-term sustainability at a rate that its stakeholders currently expect. Open innovation
models, on the other hand, encourage collaboration by removing the barriers that prevent
firms and industries from achieving long-term sustainability (Gray & Stites, 2013). Open
innovation, on the other hand, is built on "...the use of purposive inflows and outflows of
knowledge to accelerate internal innovation, and expand the markets for external use of
innovation, respectively." This is in contrast to the characteristics that are associated with the
closed innovation model (Chesbrough, 2006, p. 1). As a result, it makes it possible for
businesses to make use of a broader range of resources and expertise in order to produce
sustainable innovation, which is widely acknowledged as a promising strategy for tackling
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issues of high complexity that call for extensive knowledge. Rauter et
al. (2015), contend that due to the intricate nature of sustainable ideas, open innovation may
be regarded as a realistic strategy for improving sustainability.
1.4 Managing sustainability in companies / Sustainable innovation
The need of bringing industrial systems into harmony with nature by striking a balance
between the use and regeneration of resources and seeking to safeguard the lives of humans,
other animals, and future generations" is at the heart of the concept of sustainability (Gray &
Stites, 2013). However, in order to achieve sustainable development, collective efforts are
required not only from enterprises, but also from individuals, regions, states, and society.
Organizations play a crucial part in the transition toward sustainability (Baumgartner &
Rauter, 2017). The term "corporate sustainability strategies" refers to the methods that
businesses use to address real-world sustainability issues (Baumgartner & Rauter, 2017).
There are several different motivations presented in the literature on why businesses should
actively engage with sustainability. In general, it is possible to classify them into one of two
categories: either they are compelled to do so, for example by stakeholders or legislations, or
they do so freely, for either ethical or economic reasons.
Engaging in corporate sustainable management has the potential to result in a number of
benefits, including a decrease in costs and hazards, a gain in competitive advantage, an
improvement in reputation and legitimacy, and value generation through "win-win outcomes"
(Kurucz et al., 2008). Although interacting with sustainability seems to be essential for the
continued existence of most businesses, doing so presents a number of significant problems
due to the complexity and varied nature of the concept (Achterkamp & Vos, 2006). According
to Behnam et al. (2018), innovations aimed at sustainable development are absolutely
necessary to make businesses more environmentally responsible. According to Boons and
Lüdeke-Freund (2013), the idea of sustainable innovation can be used to explain the various
ways in which technological advancements and social behaviours contribute to the
achievement of sustainability. In order to get a better grasp of what "sustainable innovation"
actually refers to, it is necessary to break the term down into its two constituent parts.
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According to Sarkis et al (2010) definition, sustainability can be
understood as a condition of perfect equilibrium that exemplifies the goals that sustainable
development works to accomplish. In addition, innovation is built on repurposing, upgrading,
or rejuvenating ideas or methods that have already been established (Hines & Marin, 2004).
This interpretation would allude to new products, new techniques of manufacturing, new
sources of supply, the exploitation of new markets, and new ways to manage corporate
operations. But when it comes to sustainability, academics have suggested that additional
interpretations of newness are important. For example, recognising the responsibilities that
stakeholders play in transformative processes is one such interpretation. According to these
definitions, sustainable innovation can be defined as the development of sustainable ideas,
processes, or practises, such as those listed above. To be more specific, the research that has
been conducted on the topic has suggested that sustainable innovation can be defined as "the
development of products, processes, services, and technologies that contribute to the
development and well-being of human needs and institutions while respecting natural
resources and regeneration capacities" (Cillo et al., 2019). Green innovation, also known as
eco innovation or environmental innovation, is a term that can be used to refer to innovation
that focuses solely on the environmental aspect of sustainability.
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References
Achterkamp, M.C. & Vos, J.F.J. (2006). A Framework for Making Sense of Sustainable
innovation through Stakeholder Involvement. International Journal of Environmental
Technology and Management, 6(6).
Baumgartner, R.J. & Rauter, R. (2017). Strategic Perspectives of Corporate Sustainability
Management to Develop a Sustainable Organization. Journal of Cleaner Production,
140(1).
Behnam, S., Cagliano, R. & Grijalvo, M. (2018). How Should Firms Reconcile Their Open
Innovation Capabilities for Incorporating External Actors in Innovations Aimed at
Sustainable Development? Journal of Cleaner Production, 170.
Boons, F. & Lüdeke-Freund, F. (2013). Business Models for Sustainable Innovation: State-
ofthe-art and Steps Towards a Research Agenda. Journal of Cleaner Production, 45.
Cillo, V., Petruzzelli, A.M., Ardito, L. & Del Giudice, M. (2019). Understanding Sustainable
Innovation: A Systematic Literature Review. Corporate Social Responsibility and
Environmental Management, 26(5).
Gray, B. & Stites, J.P. (2013). Sustainability through Partnerships: Capitalizing on Collaboration.
Network for Business Sustainability.
Hines, F. & Marin, O. (2004). Building Innovations for Sustainability: 11th International
Conference of the Greening of Industry Network. Business Strategy and the Environment, 4.
Kurucz, E.C., Cobert, B.A. & Wheeler, D. (2008). The Business Case for Corporate Social
Responsibility. In Crane, A., McWilliams, A., Matten, D., Moon, J. & Seigel, D. (Eds.), The
Oxford Handbook on Corporate Social Responsibility. Oxford University Press, Oxford.
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Rauter, R., Perl-Vorbach, E. & Baumgartner, R.J. (2015). Is Open Innovation Supporting
Sustainable Innovation? Findings Based on a Systematic, Explorative Analysis of Existing
Literature. International Journal of Innovation and Sustainable Development, 11.
Rauter, R., Perl-Vorbach, E. & Baumgartner, R.J. (2018). Open Innovation and its effects on
economic and sustainability innovation performance. Journal of Innovation & Knowledge, 4(4).
Sarkis, J., Brust, D.V. & Cordeiro, J.J. (2010). Facilitating Sustainable Innovation through
Collaboration: A Multi-Stakeholder Perspective. Springer Dordrecht Heidelberg London New
York.
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