INNOVATION AND ORGANIZATIONAL RESILIENCE IN SELECTED MANUFACTURING FIRMS IN ENUGU STATE, NIGERIA

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CHAPTER ONE

INTRODUCTION

  • Background of the Study

In modern times where uncertainty is the order of the day, there are issues confronting the society and businesses existing in the society, and organizations that are proactive and innovative and takes the right decision  could be the organization that survives in this dynamic and ever changing business environment.

Innovation play a key role for the survival of firms; innovation “strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives” (Schumpeter, 1942: 84). More recently this view has been stated by Baumol (2002): “…under capitalism, innovative activity…becomes mandatory, a life-and-death matter for the firm and innovation has replaced price as the name of the game in a number of important industries” (Baumol, 2002: 1). Innovation matters for all different types of firms, new as well as established firms. As Schumpeter emphasises, innovation is a powerful vehicle for new firms to successfully enter the market and undermine the established firms. As well, established organizations need innovating to maintain their competitive position in the face of new and emerging or ‘disruptive’ technologies (Christensen, 1997).

Innovation is a driver of economic growth. It is linked to increased welfare, the creation of new type of jobs and the destruction of old ones. For firms, innovation is important for a number of reasons including survival, growth and shareholder return (Banbury and Mitchel, 1995). In a recent book, Baumol noted that “virtually all of the economic growth that has occurred since the eighteenth century is ultimately attributable to innovation. The Economist Intelligence Unit undertook a survey in 2007 which noted that long-run economic growth depends on the creation and fostering of an environment that encourages innovation. It is argued that countries that generate innovation, create new technologies and encourage adoption of these new technologies grow faster than those that do not. Innovation Nation (2006) states that innovation is essential to the UK’s future economic prosperity and quality of life. To raise productivity, meet the challenges of Globalization and to live within environmental and demographic limits, the UK must excel at all types of innovation. There are a number of surveys that have recently been published which confirm the importance of innovation. For example, respondents to the Boston Consulting Group for their report “Innovation 2010 – A Return to Prominence and the Emergence of New World Order” ranked innovation as a strategic priority with 26% citing it as a top priority and a further 45% ranking it as a top three priority. Research undertaken by McKinsey during 2010 supports this with their survey reporting that “84 percent of executives say innovation is extremely or very important to their companies’ growth strategy.”

To be resilient, organizations rely on strong leadership, their awareness and understanding of their operating environment, their ability to manage vulnerabilities and their ability to adapt in response to rapid change. Alastir (2010) asserts that as our society becomes more complex and independent, we are becoming more vulnerable to disruptive events from threats and hazard.

He further contends that the aim of building resilience is to remove or reduce the exposure of organizations to threats and hazards by developing protective measures which aim to reduce the likelihood and consequences of a disruptive event, by preventing when possible, responding effectively and efficiently when an event occurs, and by recovering as quickly and completely as possible. Seville et al. (2008) discuss organizational resilience as an organization’s “… ability to survive, and potentially even thrive, in times of crisis”. Organizational resilience is a continuously moving target which contributes to performance during business-as-usual and crisis situations (Mitroff, 2005). It requires organizations to adapt and to be highly reliable (Weick and Sutcliffe, 2007), and enables them to manage disruptive challenges (Durodie, 2003).

In the past two decades, attention of business managers and scholars have continued to shift towards the importance of innovation in building organizational resilience. Innovation is one of the instruments that leverages a firm upon entering new and existing market, and provide the company with a competitive edge. Innovation opens new ground and opportunities in both local and international markets by offering new products and ideas to both local and foreign markets. As businesses operate over a period of time, they face different kinds of challenges in the environment; some of these challenges if an organization is not resilient could bring about the end of these organizations.

Plessis (2007) delineates innovation as a formation of new knowledge which helps the new business return, which has purpose to make organization internal business process and structure more sophisticated and produce the market acceptable product and services. The survival of an organization is to great deal associated with how resilient an organization can be to withstand these various challenges.

In some cases people interchangeably use innovation and creativity without knowing the big difference between the two. Though innovation involves creativity Amabile et al(1996), it takes a lot more than creativity to bring about organizational innovation. Innovation is viewed by some professions as the introduction of a new good, to others it is the introduction of a new method of production while some consider it as creation or opening of new markets.

In today’s highly competitive and sensitive business environment, with the consistent and persistent change in customer taste and desires, and with firms struggling to remain in relevant positions in the industry, ideas are no longer centered on cost reduction and mass production with companies paying more attention to customer needs. Innovation has become a vital instrument for top firms to build competitive advantage above those that are less innovative. Current research has shown that companies that are usually market leaders are companies who have innovative competencies and use such competencies to satisfy variety of customers with different needs, thereby eliminating the chance of customers switching brands, while attracting competitor’s brands. Companies cannot survive through cost reduction and reengineering alone… innovation is the key element in organizational resilience and for increasing bottom – line results (Davila, Epstein and Shelton2006). Organizations have identified the numerous advantages presented by innovation and have sought to explore it in every possible way, either to improve quality or create new market or sometimes in attempt to reduce labor cost.(Davila et al, 2006).

Statement of the Problem

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