Organizational innovation is important for national development. Research by Arundel, et. al. (2007) analyzed how European countries learn and develop. They studied large surveys to come to conclusions about how companies foster inner innovation and how this leads to a unique path of national development. They create links between employee-centered skill development, organizational innovation, and national development.
The ways in which businesses and people interact, openly innovate and provide feedback create the national innovation approach (Lundvall, 1998). It is the national innovation approach that helps to determine the competitive structure of the country and its ability to succeed in the global market place. Each country and culture comes with their own way of viewing the world and interacting.
When organizations use science-based learning and experience-based learning they are able to provide higher levels of innovation and production (Jensen, et. al, 2007). It is the theory and its application that moves to higher levels of innovation that creates tangible value on the market. Employees who engage in the innovation process are part of the “learning economy”.
Organizational and national innovations are interlinked. This innovation results from feedback loops and how agents within the same organization interact at different times to create a chain-link model of development (Kline and Rosenberg, 1986). All innovation is based in interactions that lead to knowledge diffusion whether that is through employees, suppliers, competitors, or regions.
Each organization has their own unique make-up of employees that determine how they interact. When employees are encouraged to solve-problems, work together, take ownership over issues, share their knowledge, and contribute to development the organization becomes more innovative. This innovation is incremental whereby individual knowledge is turned into collective knowledge and then applied for practical use.
The authors found that the way innovation develops is nation specific and co-evolves to create different modes of innovation. Those nations likely to be more successful focus on encouraging complex problem-solving and also place greater emphasis on inner firm development than only on external sources of innovation. Learning and interaction between internal agents is as important as learning through outside agents. Organizations should balance the soft focuses of R&D and human skill input with hard focuses such as materials input analysis. Each country develops their own unique mix in development.
Arundel, et. al. (2007). How Europe's Economies Learn: A Comparison of Work Organization and Innovation Mode for the EU-15. Industrial and Corporate Change, 16 (6).
Jensen, et. al. (2007), Forms of knowledge, modes of innovation and innovation systems. Research Policy, 36, 680–693.
Kline, S. and Rosenberg, N. (1986). An overview of innovation,’ in R. Landau and N. Rosenberg (eds), The Positive Sum Game. National Academy Press: Washington D.C.
Lundvall, B. (1988), Innovation as an interactive process: from user-producer interaction to the National Innovation Systems, in G. Dosi, C. Freeman, R. R. Nelson, G. Silverberg and L. Soete (eds), Technology and Economic Theory. Pinter Publishers: London.