196 by wanghonghx


									How to gauge the innovativeness held by an entrepreneur: a
conceptually explanatory framework

Zhan Jun
PhD student, Faculty of Economics & Business Management, Ghent University, Belgium.
Lecturer, Heibei University of Economics and Trade, China.
E-mail: zhanjunok@yahoo.com          Telephone:0032 478470 888

Professor Dr Dirk Deschoolmeester
Department of Management & Organization
Faculty of Economics & Business Management, Ghent University, Belgium.
E-mail: Dirk.Deschoolmeester@ugent.be


Innovation is a very complicated continuum that is regarded, in this knowledge era, to gain
prominent momentum propelling economy forward; innovation in the 21st century is a vitally
important means for the enterprises to utilize to obtain advantage over competitors. As the leader
of an enterprise, the entrepreneur plays a very important role during the innovation activities in
his enterprise. His decision on innovation concerns very much with the future development of his
enterprise. The article intends to dissect the entrepreneur‘s innovativeness by scrutinising his
consciousness of innovation, his endeavours to innovation, and the innovation achievements
gained through his efforts.

The quality of an entrepreneur is the topic that has been discussed by the economists and social
scientific scholars; Professor Dr. Dirk Deschoolmeester, Ghent University, Belgium, put forth a
three dimension theory which is intended to be used for revealing the essential characteristics of
being an entrepreneur, the three dimension theory: the qualification in entrepreneurs‘
innovativeness, the qualification in entrepreneurs‘ management professionalization, the
qualification in entrepreneurs‘ risk handling capability and risk proactivness thus is applied for
comparison between the entrepreneurs in china and their counterparts in Belgium. The
assessment of the entrepreneurs‘ innovativeness is one of the parts of the three dimension theory.
The article intends to lay a theoretical foundation for formulating a measurement instrument that
is needed for a comparative study on the innovativeness of entrepreneurs.

Innovation and entrepreneurs’ innovativeness

To remain competitive, today‘s companies need to do more than simply deliver products or
services that are better or cheaper than those of their rivals. They must also add features, improve

performance and reduce prices more quickly. They must be faster to launch new products. If they
want to grow, they may have to enter – or even create -- new markets. The real stars reinvent
themselves not once, but over and over again.

Innovation is considered by many scholars and practioners now to be the single most important
engine of long-term competitiveness, growth and employment. The OECD estimates that
between 1970 and 1995 more than half the total growth in outputs of the developed world
resulted from innovation, and the proportion is increasing, as the economy becomes ever more
knowledge --- intensive.

Modern growth theories suggested that innovation is a crucial determinant of growth.
Schumpeter (1934,1942) was among the first to empersize the role of innovation in the
entrepreneurial process, sumpeter outlined an economic process of ―creative destruction,‖ by
which wealth was created when existing market structure were disrupted bty the indtroduction of
new goods or services that shifted resources away from existing firms and caused new
competitive entry of innovative ― new combinations‖ that propelled the dynamic evolution of the
economy (Schumpeter,1934). Thus ―innovativeness‖ became an important factor used to
characterise entrepreneurship (G. T. Lumpkin, and Gregory G..Dess ―Clarifying the
Entrepreneurial Orientation construct and Linking It to Performance‖ ―Academy of Management
Vol. 21 1996). Innovation can be achieved through different channels --- through own R&D
activities leading to new products or processes, but also through a diffusion effect associated with
imported technology or inputs or due to the presence of multinational firms, or through spill over
effects that magnify the benefits of own R&D efforts. For this reason, when evaluating the
innovative capability of a firm, indicators other than the ones directly related to own innovation
(such as measures of R&D effort) must be taken into account. In particular, equally relevant are
indicators on the ability of a firm to build on and to make the most of existing knowledge and
innovation through a process of diffusion and adoption. Stern et al (2000) in fact shows that
innovative performance depends not only on research input but also on other variables such as
the existing stock of knowledge, the openness of the firm and investment and the share of
turnover spend on training and education.

The innovativeness of the entrepreneurs is of great importance in the development of their
enterprises; the correct innovation strategy, innovation cultivation, innovation management, and
innovation capability will always supply the enterprises with effective tools to obtain competitive
advantages that push the development of their enterprises forward. Innovation will never go
forward without the innovativeness from entrepreneurs. Innovation is a complicated mixture of
various factors that go through the management of a business; the stand in the innovation
intention, the endeavours to innovation in the management, and the innovation inputs are the
aspects that objectively indicate the innovativeness held by the entrepreneurs.

1. Innovation

Innovation, in it broadest sense, comes from the Latin ‗innovare‘ meaning ‗to make something
new‘. According to Joe Tided, the innovation is a process of turning opportunities into new ideas
and of putting these into widely used practice. ‗Innovation‘ is the specific tool of entrepreneurs,
the means by which they exploit changes as an opportunity for a different business or service. It
is capable of being presented as a discipline, capable of being learned, capable of being practised

‗--- Peter Drucker (1985) Innovation and Entrepreneurship. Innovation is ‗Successful
exploitation of new ideas‘ --- UK DTI Innovation Unit definition (1994). A review of this
literature reveals that the 1991 OECD study on technological innovations best captures the
essence of innovations from an overall perceptive; innovation is an iterative process initiated by
the perception of a new market and /or new service opportunity for a technology based invention
which leads to development, production, and marketing tasks striving for the commercial success
of the invention.

   Technology Innovation is not just the same as technology invention nor as R&D

       1. Technology invention is the breakthrough in technology, product, and process, which
          creates novelty that is totally, or to a great extent, different from the existing
          product(s) or existing method(s). Technology invention merely refers to the
          technological activities, seeing about the variation in technology rather than the
          success of profit from commercialisation.

       2. Technology innovation is the new conception in technology, product, and process ,
          which has been , after being researched and developed , applied to the practical use
          and producing social and economic profits

       3. Technology R&D is only one of the cycles, which form the innovation. It also
          observes the improvement in technology in stead of commercial success of the
          research result.

       4. Technology innovation actually is the sum of activities: new conception formation,
          research and development, practical application, and commercialisation that produce
          both social and economic profit.

2. Innovativeness of entrepreneurs

Innovativeness of entrepreneurs is their propensity to innovate their business, is their willingness
to try the ways which is different from the existing, the enthusiasm to adopt new ideas or new
methods to their business, and the eagerness to implement the innovation in their business.

The degree of an entrepreneur‘s innovativeness is the level of his willingness and capability to
innovate the business he manages. A high degree of innovativeness of an entrepreneur is seen as
a high degree of willingness and the more efforts he made to strengthen the enterprise‘ capability
to innovate itself. In other words, to some extent, the degree of the entrepreneurs‘ innovativeness
is the degree to which an individual is relatively early in adopting new ideas than other
individuals. The degree of an entrepreneur‘s innovativeness will decide how far and how deep
the innovation will go in his business in order to meet both the strategic goal formulated for his
business and the requirements from the environment. As the guiding leadership of the enterprise,
the level of the innovation in his business actually, to a great extent, actually reflects the level of
his innovativeness.

Innovations come as both inventions and adoption. They come in many types and vary greatly in
complexity and scope. Companies attempting to make a profit cannot continue for long periods
without innovation .It has been accepted that innovation is the lifeblood of change in this
dynamic, uncertain, and competitive world of business faced by firms today. Innovation is the
force that destroys and creates markets and firms. It circumvents entry barriers and is a source of
sustainable competitive advantage that most firms desperately need. Entrepreneurs need to build
the competitive advantage driven by innovation to survive and thrive into the 21st century. The
literature reviews on the relationship between the investment to the innovation and the innovation
strength and turnouts show high and significantly positive effects. Investing in innovation,
therefore, is equivalent to insurance for the future. The innovativeness of the entrepreneurs is the
guarantee for the success in the future.

What shows the innovativeness of an entrepreneur?

From a macro perspective, the entrepreneurs‘ innovativeness is the willingness and the capability
of entrepreneurs to create a paradigm shift in the science and technology and/or market structure
in an industry. From a micro prospective, the innovativeness is the willingness and the capability
of entrepreneurs to influence the firm‘s existing marketing resources, technological resources,
skills, knowledge, capabilities, or strategy. Therefore, the innovativeness of an entrepreneur
mainly can be diagnosed through:

      How does he do and what he has done? ---- The commitment and the endeavors he made
       to fulfill the innovation strategy: the environment awareness by investigating technology
       trends, production opportunities, market chance etc, organization adoption & formation,
       allocation of resources, technology transfer etc. In general, the effort made by an
       entrepreneur to build up the innovation of the enterprise is an effective indicator showing
       an entrepreneur’s innovativeness.

      What has he got the business achieved from innovation? ---- The innovation outputs
       which contribute to the enterprise‘s competence building up.

      What will he do? ---- The strategic postures that he formed or agreed in the technology
       innovation strategy plan.


 ng an

                           1. How does he do and what has been done? The efforts made to



                              carry out innovation.

                          2. What are the results? The achievements made through
                             application of innovation.

                          3. What does he intend to do? The position in the technology
                             innovation strategy.

                                             Figure 1: the facets releasing an entrepreneur’s innovativeness

Practically, the assessment on the innovativeness will be done through the measurement on the
indicators of innovativeness in the innovation strategy or intention, the indicators of the efforts
made to implement innovation that include the efforts to innovation organisation construction,
the indicators of the efforts made to improve the innovation capability, and the indicators of
innovation achievements.

How does he do and what has been done? ---- The effort he practiced to fulfill the innovation
strategy and improve innovation of his business such as organization formation & adoption;
allocation of resources and so on.

Efforts and organisation formation and adaptation

Organizational in formation and adaptation and organisational innovation

Strategy is thus a precursor to organisation structure (Chandler, 1962; Miller and Friesen, 1980;
Parthasarth and Sethi, 1991). The reification of his strategic innovation intention implies that
concrete measures will be taken to reach the goals stipulated in the innovation strategy, those
measures actually are the physical embodiment of the innovativeness possessed by the
entrepreneur. Innovation is implemented on the base of variously -- formed organisation where
innovation can arise and develop, so the efforts made by the entrepreneurs for innovation
organization building or adaptation will definitely be regarded as the parameters exhibiting the
entrepreneurs‘ innovativeness. Therefore, the entrepreneurs should adopt not only their
innovation strategic posture to the environment, but also their organisational structure. Structure
is defined as capturing centralisation of authority, formalization, complexity and integration
(Miller and Droge; 1986). Firms with flexible production process and organisational structures
tend to be better at product and process innovation than more rigidly structured firms (Utterback,

1979) and numerous empirical results prove significantly the positive relationship between the
organizational structure and innovation.

A firm‘s strategies, structures, and cultures embody the purpose and goals and reflect the values
and commitments of a dominant group of managers (Miller, 1993). As a result, many aspects of a
firm are orchestrated by a core theme into a unified gestalt or configuration (Miller and Friesen,
1983). This theme will be reflected in many ways, including the organization‘s actions and
decisions toward innovation.

One of the principal themes in the management of innovation is that of the ‗innovativeness‘ of
the organisation --- the extent to which the design of the organisation facilitates or inhabits
innovation. The capability of organisations for innovation in principle implies that organisational
forms, while perfectly appropriate for stable states, actually inhibit the innovation required for
competing in changing conditions. The proposition is found in the work of Burns and Stalker
(1994) from the late 1950s; Kanter (1984) from the late 1970s; and Eisenhardt and her colleague
(Eisenhardt and Tabrizi, 1995; Brown and Eisenhardt, 1997) from the early 1990s.

Despite of the attractiveness of the idea of creative and flexible organisational innovation has
never been in either organisational or management theory and research (see the textbook as Hall
1991, Scott 1992, or any of the management textbooks in organisational theory such as Daft 1989
and Mintsberg 1979). Yet innovations reflect a critical way in which organizations respond to
either technological or market challenges (Brenner 1987, Gomes – Casseres 1994, 1996, Smith et
al 1992, Hage 1988).

Organisational innovation has been consistently defined as the adoption of an idea or behaviour
that is new to the organisation (Damanpour 1988, 1991, Daft&Becker 1978, Hage 1980, Hage
&Aiken 1970, Zaltman, Duncan& Holbek 1973, Orlemans et al 1998), in the two management
reviews (Damanpour 1991, Zammuto&O‘connor 1992), two important themes about the
determinants of innovation have emerged, namely, the importance of an organic structure
(Burns&Stalker 1961) and pro – change values. The thesis of the Zammuto&O‘Connor review is
that an organization and a pro – change strategy that provide the best chance for an successful
implementation of flexible manufacturing so that both productivity and flexibility are
achieved .The two structural variables Damanpour (1991) examined in one way or another
referred to characteristics of the organic organization – centralization and formalization.
Centralization had a robust and negative relationship with innovation, whereas formalization had
a weak and inconsistent one given various controls. Zammuto&O‘Connor(1992:717) expanded
the idea of decentralization by discussing the importance of participation of workers during the
implementation process, the expansion of the idea on decentralisation provides the reason why
organic structure --- decentralisation, horizontal communication, and shifting leadership ---
facilitates the process of implementation., this allows for mobilizing and skills and knowledge
that the employees have. In particular, Jaikumar‘s comparison (1986) of Japan and the United
States across a number of industries and Walton‘s study (1987) of the adoption of innovation in
the shipping industries of Britain, Germany, Japan, Norway, the Netherlands, and the United
States both provide considerable evidence for the assertion. That is to say that the degree of
decentralisation in an organization goes reversibly with the intensity of the innovation in an
enterprise. So the organic organisations are prone to bear and raise innovation that is expected to
cope with the contingency from the environment, the efforts made by the entrepreneurs to

construct organic organisations reveal the degree of the innovativeness he holds. The efforts will
be assessed by measuring the steps (structural variables) and the organisational changes
(structural variables) that contribute to the degree of fitness of the organizational construction
towards innovation.

Dominant themes in innovative firms are invention and pioneering (Miller, 1993). These are the
primary goals of the leaders of these firms, who then centre their strategies on product novelty
and technological sophistication (Miller, 1993). This focus on innovation is likely to have an
impact on organisational structure: flexible structure facilitate the development and
implementation of new ideas, and firms with this flexibility tend to be better at innovating than
rigidly structured firms (Utterback, 1979; Pierce and Delbecq, 1977), building up a innovation
organisation actually provides space where innovation is able to be dynamically cultivated and
nurtured. Therefore, the entrepreneurs‘ willingness, consciousness and contributions to the
forming or adapting innovative organization structure exhibit the level of his innovativeness.

Organization archetypes and innovation

There are kinds of organization archetypes, according to Minzberg‘s structural archetypes,
organizations are constructed in the following types: Simple structure; Machine bureaucracy;
Divisionalized form; Professional bureaucracy; Adhocracy; Mission – oriented; though there are
several kinds of organization archetypes but the criteria for a ‗good‘ organisation is the degree of
the fitness between the structure and the operation probability rather than the organization
archetypes or forms themselves. That is to say, the organization is the place where the creativity
and innovation can arise and prosper the organisation is always expected to be built or adapted
to better generate and implement technology innovation.

Organization Structure: further analysis

Organization structure has been studied as a key variable in affecting innovation activities in
organizations. Two key variables of organization structure are included: decentralization and
formalization. Decentralization refers to the degree of delegating authority from top management
to the lower-level personnel within organizations (Hall, 1982; Van de Ven &Ferry, 1980).
Previous research results suggest that decentralization is positively associated with the frequency
and the intensity of innovation (Hage & Dewar, 1973; Moch & Morse, 1977). When decisions
are concentrated at the top of the organization, lower-level personnel have less discretion to
experiment to suit their needs and interests (Wilensky, 1967). If a small group of managers
monopolize the power of the organization, the innovative ideas of less influential parties have
higher chance of being refused because it imperils the power base of the top managers (Hage &
Dewar, 1973). On the other hand, when decisions are delegated to lower level in the hierarchy,
lower-level personnel are in a better position to adopt innovations. Creativity, as the key driver of
innovation, is fostered when individuals and teams have relatively high autonomy in the day-to-
day conduct of the operations and a sense of ownership over their work and their own ideas
(Bailyn, 1985; Paolillo & Brown, 1978). Recent literature on empowerment also indicates that
innovation is positively associated with decentralized decision making (Burns & Stalker, 1961;
Damanpour, 1991; Kessler & Chakrabarti, 1996). In a similar vein, loose coupling or network
type organizational arrangements, which are characterized by the decentralized power structure,
facilitate innovation (Mintzberg, 1973). Therefore, a positive association between
decentralization and the outcomes of innovation can be suggested.

Another organization structural variable of interest is formalization. Formalization is defined by
the degree to which key areas of decision-making are subject to formal rules and procedures
(Hall, 1982). Initiation and implementation of new programs in an organization are promoted
when rigid rules and regulations are absent (Burns & Stalker, 1961; Lawrence & Lorsch, 1968).
Lower formalization allows individuals to have more initiatives and fewer negative feedbacks
from higher rank managers. Firms with flexible and organic organizational structures tend to be
better at product and process innovation than more mechanistic firms with highly formalized
structure (Thompson, 1967; Utterbeck, 1979). Therefore, formalization is believed to be
negatively associated with innovation outcomes in an organization.

An innovative organisation

Organisation design is made for innovation facilitation. The extensive debate on organization
structure began to resole itself into a ‗contingency‘ model in the 1970s.In essence this view
argues that there is no single ‗best‘ structure but that successful organizations tend to be those
which develop the most suitable ‗fit‘ between structure and operating contingencies. ―Innovative
organisation‖ implies more than a structure; it is an integrated set of components that work
together to create and reinforce the kind of environment that enables innovation to flourish.

It is fact that increasing innovation is becoming a corporate – wide task, involving production,
marketing, administration, purchasing and many other functions, this provides strong pressure for
widespread organizational change towards more organic models. The ideal balance between the
multi functions in organization reveals itself in the efforts to reduce ―time to market‖ in a range
of business. Rapid product innovation and improved customer responsiveness are being achieved
through extensive organizational change programmes involving parallel working, early
involvement of different functional specialists, closer market links and user involvement, and
through the development of team working and other organizational aids to co – ordination.

The components of an innovative organisation

Effective team working: effective team building is a critical determinant of project success.

Innovation is primarily about combining different perspectives in solving problems, and there is
thus much potential value in team working. Experiment indicates that groups have more to offer
than individuals in terms of both fluency of idea generation and in flexibility of solution
developed. A variety of studies involving different US engineering companies have been
conducted, aiming at identifying key drivers and barriers to effective performance, their
conclusion were that effective team building is a critical determinant of project
success.(Thamhain,H and Wilemon,D (1987)‘Building High Performance Engineering Project
Teams‘,IEEE Transactions on Engineering Management,EM—34(3), 130 –137).According to
Bixby et al, that drew the similar conclusion in their work with organizations associated with the
Ashridge Management College team working programs Bixby,K (1987) Superteams, Fontana,
London ,pointed out that the key elements include:

     Clear defined tasks and objectives.
     Effective team leadership.
     Good balance of team roles and match to individual behavioural style.
     Effective conflict resolution mechanisms within the group.
     Continuing liaison with external organization.
Key individuals

The presence of key enabling figures (or a group of people) is one of the important elements for
the successful innovation in an enterprise, it is not able to be denied that the talent from people is
different, for instance, some people are really genii, good at creating innovations in their scopes;
others are competent in carry the inventions, in an optimal mode, to commercial success by
guaranteeing the realization of innovation to be smooth and sound in organization. Therefore,
the key individuals come from two ranges: technical and managerial.

The presence of the key individuals will undoubtedly increase the enterprise‘s momentum in
innovation advantages.

   The recruitment of the key individuals. Percentage of the technicians versus employees in the
   The innovation manager‘s participation in top decision-making process.

Creative climate

    Cultural is a complex concept but it basically equates to the pattern of shared values, beliefs
    and agreed norms that shape behaviour. Organization structures are the visible artefacts of
    what can be termed an innovative culture--- one in which innovation can thrive.

            The design of effective reward systems that encourage both performance of repeated
             tasks and development of new ideas.

External focus

    One of characteristics is the successful innovating organizations is an orientation which is
    essentially open to new stimuli from outside: major technological development, key
    customers, the rivalry from the competitors etc. Awareness of the costumers` demand will
    reveal the organization‘s action to improve quality and innovation in term of ‗total quality

    The mechanisms for enabling broader awareness of customers‘ demand vary, but the
    principle includes:

        1.   Effective and efficient communication with costumers.
        2.   Maximum satisfaction of customers demand --- quality improvement.
        3.   Getting complete and truthful feedback from customers---- survey techniques
        4.   Preparation in advance for the challenges.

A learning organisation

   As the acceleration of the technologies and information flow, learning organization is the
   concept discussed by more and more researchers and scholars in recent years, knowledge is
   regarded as the basis for the competence for this century, and innovation is the form for the
   knowledge to be used as the basis for competence, innovation can be represented as a
   learning cycle, through sets of the cycles, not only the knowledge of technologies can be
   mastered, enriched, but also the knowledge of how to manage the process is possessed of and
   enhanced . Sometimes loops of innovation cycles are necessarily needed to bring about
   acceptable results. Therefore the strategic destination is approached through the rounds of
   cycles of innovation. However, organisations do not learn, it is the people within them who
   do, the routines directed at creating the stage on which they act and scripts they work to.
   Therefore, Garvin presents the reification of what has been discussed:

     1.   Training and development of staff
     2.   Development of a formal learning process based on a problem solving cycle
     3.   Monitoring and measurement
     4.   Documentation
     5.   Experiment
     6.   Challenging existing practices
     7.   Use of different perspectives
     8.   Reflection --- learning from the past

 Extensive communication

The realisation of extensive, multidirectional communication between cross—functional teams
and departments is of great importance to innovation building in organization.

The intensive involvement in innovation:

Whereas innovation is often seen as the province of technical specialists in R&D, engineering or
design, the underlying creative skills and problem solving abilities are possessed by everyone,.
―If mechanisms can be found to focus such abilities on a regular basis across the entire company ,
the resulting innovative potential is enormous, the sum of these efforts can have far—reaching
impact‖ Bessant, J.(1994)‘Rediscovering continuous improvement‘, Technovation,14(1),17—
29 .surveys of award—winning companies which have recognized (by their peers‘ votes, by
external performance measures , by independent auditing, etc) to have achieved high class
competitive edge increasingly converge in the importance attached to employee involvement and
participation in CI ( continuous improvement ), the study by UK Department of Trade and
Industry of ‗winning‘ firms highlighted active employee involvement in problem solving as a
critical determinant of success.DTI(1995) Winning, Department of Trade and Industry, London.

In general, ―higher levels of participation in innovation represent a competitive advantage‖ Joe
Tidd , John Bessant and Keith Pavitt ―building the innovative organization‖1997.

      The level of employee involvement in the innovation process, particularly through
       sustained incremental problem solving --- continuous improvement.

      The lean manufacturing: the central to this alternative model was an emphasis on team
       working and participation in innovation.

The total number of suggestions from employees & ideas per employee is also an indicator
showing the level of employees‘ participation in the innovation activities in an enterprise.

The preceding has explored the major features of innovative organisations, and indicated some of
the characteristics that have been found to be important.

The commitment to innovative organisation

―Top management commitment to innovative organization building ‖ is the entrepreneurs‘
contribution towards the innovative organization construction or adaptation in his enterprise, it is
not only a common prescription associated with successful innovation; but also the desire and
enthusiasm for innovation success in the enterprise, the measurement on the commitment reveals
the level of the entrepreneurs‘ innovativeness. The challenge is to translate the concept into
reality by finding mechanisms that demonstrate and reinforce the sense of management
involvement, commitment, enthusiasm and support. It is the direct illustration of the degree of
the innovativeness possessed by the entrepreneur, which, to a great extent, decides the degree of
success from the innovation that is to be carried out in an enterprise .the top commitment to
innovative organisation building are easily embodied in the following aspects:

      The creativity and flexibility of organisation: organisation will be designed to enable
       high levels of creativity, and get appropriate balance between ―mechanistic‖ and
       ―organic‖ options for special contingencies.

      The key individuals‘ presence: the key innovative individuals for energising and
       facilitating innovation.

      Team selection and teamwork: Building for appropriate use of teams at local, cross –
       functional and inter--organisational level to solve problems; Co-operation among the

      The employees‘ training and education: Continuing and stretching individual
       development: Long term commitment to education and training to ensure high levels of
       competence and skills to learn effectively.

      Extensive and smooth communication within and between the organization, internally in
       three directions: upwards, downwards, and laterally.

      High involvement in innovation: Employees‘ participation in organisation wide
       continuous innovation activities.

      Customer focus: Internal and external customer orientation via total quality culture and
       continuous improvement.
      Creative climate: Positive approach to creative ideas, supported by relevant reward

      Learning organisation: Awareness of environmental potentials by contacting agents
       involved in your business activities; Processes, structures and cultures which help
       institutionalise individual learning.

Generally speaking, by summing up the above—mentioned description and analysis, the
contribution by the entrepreneurs mainly covers the following aspects: the organic organisation
formation and adaptation; the employees‘ education and training; the interaction with the outside
sources; internal team work quality; innovation incentive mechanism. However, managing
organizational innovation is not as simple as the variables listed below; instead it is a
complicated mechanism interweaved with more complexity. Anyway, the contents listed in the
following form exhibit the major indicators concerning the organisational innovation. The
practical method is to measure the determinants of the above mentions aspects. Determinants of
organisational innovation such as the structural variables are the primary determinants of
organisational innovation (Damanpour, 1988, 1991; Kim, 1980; Kimberly and Evanisko, 1981)
the analysis of the entrepreneurs‘ contributions to the contents listed in the form by measuring
the indicators will surely provide convincing evidence proving the level of the innovativeness
held by the entrepreneurs.

                   Variables                                   Measurable indicators

                                                   Degree of organisation creativity
 1.   Creativity                                   The adoption of TQM in enterprise
                                                   The adoption of BPR in enterprise

                                                   Degree of organisation flexibility and decentralisation
 2.   Flexibility & Response to changes            The ability to cope with contingency
                                                   Degree of speediness to changes

                                                   Expenditures on the key innovative individuals.
 3.   Key innovative individuals                   The presence of the R&D researchers in the top
                                                    management decision.

                                                   Degree of effectiveness of the co -- operation in the
 4.   Team work
                                                    team work

                                                   Percentage of expenditures on the employee education
 5.   Employee education and training
                                                    and training in the yearly total sales revenue

                                                   Degree of frequency of the interact ion with outside
 6.   Interact with outside sources

                                                   Degree of effectiveness of the communication within
 7.   Communication within enterprise

 8.   Creative climate                             Rewarding system establishment

                                                   Percentage of the expenditures on environmental
 9.   Awareness of the potentials
                                                    scanning in the yearly total sales revenue

                                               Figure 5: the variables determining an innovative organization

Allocation of resources: the commitment to improve innovation capacity of business

Resources allocation reflects, to a large extent, the entrepreneurial orientation in terms of
innovativeness. A number of researchers have suggested examining firm resources allocations to
operationalize strategy concepts (Gale, 1972; Miller & Friesen, 1978). Many of these efforts are
similar to the sub dimensions of the entrepreneurial orientation construct --- innovativeness, risk
taking, proactiveness, competitive aggressiveness, and autonomy (Lumpking & Dess, 1996).
Measures of innovativeness, for exa;ple, might include the percentage of scientists and engineers
relative to the total number of employees in a firm. (Douglas W. Lyon, G.T. Lumpkin, G. Dess
2000). Hit, Hoskisson, and Kim (1997) employed R&D intensity, measured as the ratio of
research and development expenditures to the firm‘s total number of employees, as a proxy for
innovation. Expenditures are often for research and development, in one form or another, and
often used proxy of innovation (c,f., Hitt, Hosskison & Kim, 1997; Baysinger & Hoskisson, 1998;
Hambrick & McMillan, 1985). Growth of production and productivity are positively related to

the research inputs, patents and publications and the like; numerous entrepreneurship
researchers‘ theories and empirical results prove that the relation between the growth of
innovation strength and the innovation inputs is statistically significant, therefore, the measures
to increase the innovation capability, which includes R&D, human resources, Manufacture, and
marketing, is the indicators (such as the percentage of R&D expenditures in the yearly total sales
revenue , R&D personnel in the total technician number, innovation expenditures as a
percentage of yearly sales , the expenditures on machinery for innovation in the total fixed
assets etc ) showing the innovativeness held by the entrepreneurs. So the article tries to assess
the degree of the innovativeness of the entrepreneurs by analysing the innovation intention, the
endeavours made by the entrepreneurs to the factors that contribute to the innovation, the
innovation outputs which indicating the enterprise‘s innovation strength.

The effort to build up the enterprises‘ innovation capability is the evidence more obviously
showing how much innovativeness an entrepreneur holds, and entrepreneurs understand the
positive significant relationship between the innovation capability and innovation outputs, the
relationship has been proved by a large amount of theoretical research and empirical results in
the scope of entrepreneurial study.

The inputs of resources to innovation capability are the indicators to be analysed for the
measurement of the entrepreneurs‘ innovativeness.

Determinants of innovation capability

Successful innovation will never be generated to grow without physically materialized support,
which is regarded as the tangible basis for the innovation. The willingness to build the material
ground for innovation is revealed through how much effort made for investment to innovation.
Though each enterprise is different from each other, but the average score calculated from the
general ‗diagnose‘ on the effort to the innovation would definitely discover the difference
existing in the willingness among the entrepreneurs to innovate. Understanding of the
aggregation of ―product-market innovation‖ and ―technological innovation‖ is an access to the
full comprehension of innovation in which innovativeness is exhibited. Till recently, most
research has focused on technological innovativeness, which consists primarily of products and
processes development, engineering, research, and an emphasis on technical expertise and
industrial knowledge (Cooper, 1971; Maidique & Patch, 1982). Product-market innovativeness
suggests an emphasis on product design, market research, and advertising & promotion (Miller &
Friesen, 1978; Scherer, 1980). Even this broad categorization may be hard to distinguish;
difficult to measure, however, these are very important ‗parameters‘ indicating the efforts
contributed to innovation and achievements obtained through innovation, thus they conceptualize,
to some extent, the innovativeness held by the entrepreneurs.

―Innovation capacity is the ability to make major improvements and modifications to existing
technologies, and to create new technologies. Such capability contributes to dynamic competitive
advantage.‖ Henny Romijn and Mike Albu. ―Innovativeness in Small High technology Firms in
the United Kingdom‖, 2000. A variety of factors internal and external to a firm may contribute to
the build—up of innovation capability (see, e.g., Bell 1984).

The innovation capability is regarded as the foundation for an enterprise to implement innovation
activities; this capacity is of vital importance to the success of the innovation results. The
innovation capacity can be categorised into different groups: product innovation capability;
process innovation capacity; organization innovation, and the capability to acquire, to diffuse the
technology transferred from outside sources. However, though there are so many different groups
of innovation capacity, it is the fact that innovation capacity will never be completely summed up
and represented by one single or several capabilities; Innovation capability actually is the
integration and colligation of multi --capabilities. The technology innovation is involved in
almost all the aspects of business operation and all the cycles of the business activities in an
enterprise. The vulnerability is that the innovation will turn out to be a failure or a ‗dummy‘ that
operates in an extremely poor efficiency way without adequate supportive capacity from each
and every aspect or cycle concerned in the course of innovation implementation. Therefore,
technology innovation capability is comprehensiveness. Anyway the classification of the
innovation capacity is an artefact that helps to explain and analysis the innovation capability
during the management process.

The technology innovation capability comes from the competence of a group of comprehensively
integrated factors that generally include the capability of innovation investment, R&D capacity,
manufacturing capacity, marketing capability and management capability.

      Capability of innovation investment

          R&D capability

       Manufacture capability
                                                       Technology innovation capability

       Marketing capability

         Management capacity

                                              Figure 6: Composition of technology innovation capability

Innovation investment capability is actually the capability to provide the physical basis on which
the innovation is be able to inaugurated, sustained and kept flourish         because technology
innovation is the activity concerning the acquisition and allocation of resources. Practically
speaking, Innovation among enterprises encompasses not only the creation of knowledge through
research and technological development but also the various processes by which new technology

is diffused, absorbed and applied. Innovation may involve investment in capital equipment or
intermediate goods that embody new technologies, as well as in the development of intangible
assets of knowledge and skill. In both cases, such activity may be carried out in ---house or may
involve the acquisition of equipment, goods, services or know how from outside the firm. The
information about firm‘s expenditure on all these aspects, allowing comparative analysis of
investment in innovation using the ratio of expenditure on innovation activities to total company
turnover, called innovation intensity.

1. The innovation investment capacity includes:

                                             Investment capacity in form of financial capital: the capabilities of raising financial
                                              capital for R&D, new products launch preparation, marketing, and the capability to
                                              use the financial investment.

                                             Investment capacity in form of Human resources: the capability of recruitment,
                                              training, and administration of the specialists of R&D, process and manufacture, new
                                              products marketing, and management and the like.

                                                                          R&D investment
    Capability of innovation investment

                                                                      Expenditure on technology purchase

                                                                     Application of the new products and new process

                                                                          Number of technicians

                                                                        Figure 7: the variables determining the capability of innovation investment

The assessment of the variables can be accomplished by measuring the indicators signalling the
strength of this capability of innovation investment variables. The contributions or commitments
towards the improvement of the innovation capability are the evidence proving the
entrepreneurs‘ innovativeness. That is to say, diagnosing the variables of the above — mentioned
is analysing or assessing the degree of innovativeness held by the entrepreneurs.

                                             Variables                                                     Measurable indicators

                               R&D investment                                          1.   Percentage of R&D investment in the yearly total sales
Capability of


                               Cost for technology purchase:                           2.   Percentage of the cost for technology purchase in the yearly total sales

                               Application of the new products and new process:        3.   Percentage of the cost for new products launch in the total assets

                               Number of technicians:                                  4.   Percentage of the technicians in the total number of employees

                                                                Figure 8: variables& measurable indicators of innovation investment capability

               2. R&D capability includes:

                          The capability of technology selection: monitoring and anticipating the technology trends,
                           deciding R&D orientation, choosing exploitation projects, identify technology problems.

                          The capacity of solving technology problems: the capability of solving technical
                           problems by applying current technology and knowledge, solving technical difficulties by
                           use of achievements which result from R&D.

                          The capability of imitation: the capability of imitating the current products and improving

                          Creation capability: the capability of invention,

                          R&D organising capability: the capability of supervising the R&D progress.

                                           Variables                                                    Measurable indicators
                                                                                  1.    Percentage of the R&D researchers in the total number of technicians
      R&D capability

                                R&D investment

                               The average R&D expenditures per person            2.    R&D investment / total number of R&D researchers

                               The average patent number held                     3.    The number of patents / the number of R&D researchers

                                                                        Figure 9: variables & measurable indicators of R&D capability

               3. Manufacture capability concerns:

                          The capability of new products manufacture: the capability of equipment‘s‘ manufacture,
                           the design of process and implementation capability, products quality guarantee
                           capability, the capability of matching the change in products design.

                          Fixed assets: the value of the fixed assets /the total number of the employees

                          The average time (in year) of the education employees received.

                                                           Variables                                                    Measurable indicators

                                           The competence of the new equipments for innovated
                                                                                                         1.    Percentage of the value in the total equipments value.


                                           Employees education level                                    2.    Average time (in year) of the education employees received

                                           Average fixed assets competence                              3.    Value of the fixed assets /the total number of the employees

                                                                        Figure 10: variables & measurable indicators of manufacture capability
              4. Marketing capability includes:

                                    The capacity of market research: the capability of forecasting and identifying the
                                     potential market, exploitation of new market etc.

                                    Sales capacity: the capability of sales network building and advertisement.

                                    Commercialization: the time needed for commodities to enter market。

                                                        Variables                                                Measurable indicators
                                                 Advertisement cost                      1.     Percentage of the new products advertisement cost in the yearly total sales.
              Marketing Capability

                                                                                          2.     Average time (in month) needed from new products trial sales to normal
                                                 The speed to market
                                                                                          3.     (Number of full time market researchers + the number of part time market
                                                 The market research                            researcher) / the total number of the sales staffs
                                                                                          4.      The percentage of market research expenditure in the yearly sales.
                                                                                          5.     Number of new products sales places / the number of the new products
                                                 The sales network
                                                                                                 sales places to be needs

                                                                                 Figure 11: variables & measurable indicators of marketing capability

   5. Innovation management capability:

                                    The capacity of technology innovation strategic management: the capability of designing
                                     and implementing technology strategy.

                                    The capability of technology innovation process: the capability of designing and
                                     implementing innovation plan, the management capability of the cycles in the course of
                                     innovation, the capability of co-ordinating the sections and cycles in the course of

                                    The capability of establishing innovation mechanism and operation: the capability of
                                     formulating incentive mechanism and implementation, supervision and innovation
                                     encouragement capability.

                                           Variables                                              Measurable indicators

                                    Innovation strategy selection                Quality of the chosen innovation strategy to the ever changing environment

                                    Innovation incentive mechanism               Percent of the incentive expenditure in the total yearly sales turnover

                                    Innovation management                        Effectiveness of innovation management

                                                                      Figure 12: variables & measurable indicators of marketing capability

The endeavours made by the entrepreneurs to innovation capability, as it is analysed above, are
the concrete proof of the entrepreneurs‘ innovation intension in their innovation strategy. The
measurable indicators listed above are the facts of comparability.

        Entrepreneurs‘ efforts made for the innovation construction

                         Organization building and adjustment in the past
                             Creativity and creative climate
                             team work and cooperation,
                             flexibility and speediness from the response to
                             interaction with outside sources,
                             efficiency of internal communication
                             the presence of key innovative individuals                                 Entrepreneurs‘ innovativeness revealed
                                                                                                         through their efforts made for
                         Efforts made for the improvement of innovation                                 innovation in the past.
                              Innovation investment capability
                              R D capability
                              Manufacture capability
                              Marketing capability
                              Management capability

Figure13: entrepreneurs’ innovativeness revealed through their efforts made in the past

What are the results? ---- The innovation outputs: the proof of both innovation achievements
and personal innovativeness.

The innovation outputs of an enterprise is the convincing evidence unveiling the enterprise‘s
innovation capability, the innovation achievements are tightly associated with the role of the
entrepreneur because he acts as the strategy decision maker choosing correct innovation strategy,
the architect formulating adapting organization fit for innovation in the enterprise, the patron
improving his enterprise innovation capability, so an entrepreneur‘s innovativeness is the

propeller spurring the entrepreneurs to innovate their business. It is his innovativeness that results
to the innovation achievements; the level of the innovation strength illustrates how much
innovativeness the entrepreneur possesses of. Accordingly, the enterprises‘ innovation strength
gained through innovation is reflection of a part of an entrepreneur‘s innovativeness.

At the present time, many innovation researchers remain more or less based on the idea that firms
face only one problem in innovation, namely the scale and finance of R&D. But the extreme
diversity of innovation progress at both industry and firm level suggests that firms face a variety
of quite different problems. Innovation and technology policy should reflect this, with a more
subtle and differentiated mix of objectives and instruments corresponding to the actual
characteristics of innovation processes.

Most of the debate is still based on the so – called ‗linear model‘ of innovation. In this model,
innovation is a process that occurs in a roughly linear progression from research to invention to
innovation and then diffusion of new techniques. Within the research process there is a similar
progression, from basic scientific knowledge, to technological knowledge to practical
engineering. It is of course this supposed linearity that justifies treating R&D as a major indicator
for innovation activity as a whole. But the linear model is widely criticized for two reasons:
innovation process is seen as progression between separate stages rather than in terms of
interactions and feedbacks between different innovative functions; the second, it places an over
emphasis on, R&D, as opposed to non R&D inputs to innovation. the ‗chain – linked model‘ of
innovation, by contrast, conceptualises innovation in terms of interaction between market
opportunities and the firms knowledge base and innovation capability, and suggests that no
simple progression takes place and a key element in determining the success of innovation is the
continuous interaction between marketing and the invention/design stages.

For that reason, the innovation outputs measurement normally will be done on the basis of the
collection of innovation statistical data, and the indicators derived from innovation capability are
the most important forms of such information, typically they are: the number of innovations both
radical and increment which form most part of the innovation of an enterprise, the number of
patents which are recorded in the US Patent Office, the European Patent Office and the domestic
Patent office even patent data is limited by variations in firms‘ and industries‘ propensity to
patent; moreover it tells us only about the invention phase of the innovation process, and little
about commercialisation and economic value and impact .

Principally, innovation achievements can be manifested in the following five key areas of
innovation which are identified such as product, logistics, information technology and
automation process:

           (1) Product innovation (numerical control, value analysis, patent filing, new product
               development, zero defects, product-line reduction/standardization, and
               government award on best new products);

           (2) Logistics innovation (MRP, JIT, newly designed procurement systems, and other
               types of logistics innovation);

        (3) Information and automation innovation (CAD, CAM, GT, IT, FMS, and ERP);

        (4) Process innovation (statistical quality control, reengineering, TQM, process
            technology for new products, process technology for existing products, 50 or 100
            PPM, technical advice for the suppliers, zero defects, and ISO 9000);

Measurement on the innovation outputs

Innovation is inaugurated and implemented aiming to cherish positive achievements which
reinforce the competence of enterprises. It is the entrepreneurs‘ innovation motivation and
enthusiasm that innovation is possible to be launched in their enterprises. To gauge
entrepreneurs‘ innovativeness requires not only to assess the efforts that the entrepreneurs
made in the past but also to appraise the output through innovation that was implemented in
the past.

The innovation success is corroborated by a series of tangible evidence, upon which the
evaluation is made so as to present a most representative depiction to the success acquired
through innovation. Thus, a complete comprehension of the entrepreneurs‘ innovativeness
will not be made available without probing into the facts of innovation achievements.

In actuality, innovation achievements involve numerous factors or evidence, either tangible
or intangible, which are not possible to be put into the research list. A brief amount of the
most demonstrative factors, therefore, are quoted as the key parameters which are expected to
display the innovation achievements. Consequently, the review of the selected key evidence
is the most realistic and plausible method to examine the innovativeness held by the

According to the above-mentioned key areas where the innovation outputs exhibit themselves,
the innovation capability of an enterprise will be diagnosed through the analysis of the
innovation achievements gained from the areas. Naturally, the innovation achievements are
also the convincing evidence illustrating the innovation strength in the enterprise innovation
capability, which can be evaluated by means of seven different indicators that reveal aspects
of these capabilities, namely:

1.   The incidence of major product innovation, or completed improvement of an existing

2.   The incidence of major process innovations.

3.   The incidence of major improvements in production organization.

4.   The occurrence of substantial ‗incremental‘ innovation.

5.   An ‗innovativeness index‘ which combines the information about the above four
     indicators, and which also takes account of the complexity and originality of the

6.   The number of patent(s) held.

   7.   An indicator measuring the firm‘s ISO accreditation status.

The indicators 1 through 3 are straightforward and correspond to innovation measures commonly
used in innovation surveys. But they fail to convey the substantive information about the extent
of firm‘s innovativeness. In order to get idea about the extent to which firms have effected minor
improvement to their products, process and organisation on an ongoing basis because a lot of the
improvements that firms pursue take this form, therefore 4 is demanded.

The number of patents held only captures the top of the innovation ‗iceberg‘. Moreover, because
innovation comes from creation and adaptation, the evaluation of an enterprise‘s innovation
outputs must be done on the base of consideration of both incremental and radical innovations
that took place within the enterprise. The ‗innovativeness index‘ 5 address these problems to
some extent. It is unweighted average of four separate innovativeness scores: product innovation,
process innovation, organizational improvement, and incremental innovation. These scores
capture not merely the incidence of the innovations in question, but also embody an assessment
of their originality and technological complexity, using a classification along two dimensions.
Theses are: 1. the degree of novelty embodied in the innovation. 2, the extent to which the
development of these innovations required specialised scientific or advanced technological
expertise, or whether they were in fact creative novel products that are nevertheless quite easy to
develop from a technical point of view.

Radicalness and incrementalness are the two parameters measuring the quality of innovation.
According to the innovation theory, Innovation is normally grouped into two categories: radical
innovation and incremental innovation. Thus, the novelty of innovation can be measured by the
ratings from the range between being radical and being incremental. Radical innovation is totally
different from or new to what exists, thus the degree of novelty determines the redicalness in
innovation. The successful novelty from innovation can more tremendously enhance the
competence of an enterprise than the incremental innovation does. What is more, the scientific
intensity is another parameter measuring the ―momentum of innovation‖. The higher scientific
intensity in innovation demands more inputs to the innovation, and the enterprises are able to
avail themselves of scientific intensity for the improvement of their strength. Therefore, the more
scientific intensive innovation is of more significance than the clever gimmick innovation.
Conclusively, radical innovation is graded, in terms of quality of innovation, higher than
incremental innovation, thus, a rational interpretation of the innovation achievements is
accomplished by examining the facts in the two dimensions: degree of novelty, degree of science
intensity. The evaluation in these two dimensions is able to bear relatively reliable consequences
of the innovation which is fulfilled in an enterprise. Moreover, innovation, generally speaking,
occurs mainly in the sections such as products, process and technology, organization, logistic and
information etc. As a consequence, the results gained through the evaluation of the facts in the
two dimensions are the credible manifestation of the innovation achievements. To weigh up the
innovation results rated from the two dimensions is a pragmatic approach to point out the
innovativeness held by the entrepreneurs.

            Enterprise innovation
                                                           Dimension of novelty                  Dimension of scientific                Evaluation of
                   Product                                                                      intensity                              innovation
                   Process and technology                       Radicalness                                                           achievements
                   Organization                                 Incrementalness
                   Logistic and information

      Figure14: concept of evaluation of enterprise innovation achievements in two dimensions.

      According to the conceptual principle, a series of devices to be used for analysis innovation
      achievements can be formulated. As are demonstrated by the Figures from No.13 to No. 16.
      Using this classification, enterprises could receive a maximum score of 5 when they had recently
      developed at least one technologically highly complex technology that was fundamentally new to
      the world, whereas a ‗clever gimmick‘ similar to what other firms in the industry were also
      working on would get a score of only 2. Each enterprise would thus receive four scores, three of
      these for major innovations (which can rang between 0 to 5): and one for incremental innovations
      (which ranges from 0 to 3). The innovativeness index was calculated for each firm as the simple
      average of these four values.

                                                                                            Low Degree of science intensity High
                                Degree of novelty
                                                                                    'Clever gimmick'                   Science -- intensive
                       1.fundimentally new to the world                                      4                                      5

                       2.similar innovations adopted in other industries                     3                                      4

   A: Major            3.similar innovations adopted in firm's own
   innovations in      industry, but its innovations differ in identifiable                  3                                      4
   product(s)          ways from other companies' innovation
                       4.same or very similar innovations adopted by
                                                                                             2                                      3
                       5. no major innovations at all                                                             0
   B: Incremental      yes                                                                   1                                      3
   innovations in
   products            no                                                                                         0

        Figure 15: measurement on innovation achievements in product(s) according to complexity and originality

                                                                                       Low Degree of science intensity High
                             Degree of novelty
                                                                              'Clever gimmick'                    Science -- intensive
                 1.fundimentally new to the world                                       4                                       5
                 2.similar innovations adopted in other industries                      3                                       4
A: Major         3.similar innovations adopted in firm's own
innovations in   industry, but its innovations differ in identifiable                   3                                       4
process and      ways from other companies' innovation
                 4.same or very similar innovations adopted by
                                                                                        2                                       3
                 5. no major innovations at all                                                              0
B: Incremental   yes                                                                    1                                       3
innovations in
process and      no                                                                                          0

       Figure 16: measurement on innovation achievements in process according to complexity and originality

                                                                               Low Degree of science intensity High
                         Degree of novelty
                                                                        'Clever gimmick'            Science -- intensive
                 1.fundimentally new to the world                               4                                5
                 2.similar innovations adopted in other industries              3                                4

A: Major         3.similar innovations adopted in firm's own
innovations in   industry, but its innovations differ in identifiable           3                                4
organisation     ways from other companies' innovation
                 4.same or very similar innovations adopted by
                                                                                2                                3
                 5. no major innovations at all                                                 0
B: Incremental   yes                                                            1                                3
innovations      no                                                                             0

                  Figure 17: measurement on innovation achievements in organisation according to complexity and originality

                                                                               Low Degree of science intensity High
                         Degree of novelty
                                                                        'Clever gimmick'            Science -- intensive
                 1.fundimentally new to the world                               4                                5
                 2.similar innovations adopted in other industries              3                                4
A: Major         3.similar innovations adopted in firm's own
innovations in   industry, but its innovations differ in identifiable           3                                4
logistics and    ways from other companies' innovation
                 4.same or very similar innovations adopted by
                                                                                2                                3
                 5. no major innovations at all                                                 0

B: Incremental   yes                                                            1                                3
innovations in
logistics and
information      no                                                                             0

      Figure 18: measurement on innovation achievements in logistics and information according to complexity and originality

      ISO status and innovation

      An enterprise‘s accreditation status with respect to ISO 9000 or other related quality standard,
      such as QS 1000(indicator 7) gives an indication of the extent to which quality procedures are
      being observed (details in the following Figure 17). Enterprises that score high on this indicator
      observe manufacturing and design procedures according to internationally approved standards.
      Having accredited design procedures in particular would suggest that innovation is a major
      formally organised activity in an enterprise.

                             Status                                                       Score
Obtained ISO 9001                                                                           5
ISO 9002 obtained + ISO 9001 in process                                                     4
ISO 9002 obtained                                                                           3
ISO 9001 in process                                                                         2
ISO 9002 in process                                                                         1
No accreditation                                                                            0

                         Figure 19: Scale used for scoring firms’ innovation according to their ISO accreditation statues
            Note: ISO9001 includes both design and manufacturing processes. ISO9002 includes only manufacturing process .

The other indices of the variables concerning innovation achievements also include:

    Conventionally speaking, the fundamental purpose for the enterprises to innovate is to obtain
    competence advantages over the rivals in the industry; the advantage mainly involves the
    following aspects: market dominance; high quality & low defects; minimum in price & cost;
    maximum in productivity and profit and so on, the aspects consisting of advantage will be
    measured in term of the following variables:

         The percentage of the sale of new products in the yearly total sales.

         The percentage of the market share increased contributed by innovation success.

         The percentage of quality increased contributed by innovation success.

     The percentage of cost decreased contributed by innovation success.

     The percentage of the profit gained by new products in the total yearly sales.

     The percentage of the profit gained through new technology or process in the total yearly

    The indices mentioned above are the facts showing the quality of the enterprise innovation,
    which are frequently used in the survey investigating the innovation capability of enterprises.

    Since the innovation capability is the result of the entrepreneurs‘ innovation management
    indicating the entrepreneurs‘ innovation endeavours, so the indices are also the evidence
    manifesting the innovativeness of the entrepreneurs.

       Achievements gained through innovation
           Innovation in products
                Radical
                Incremental
           Innovation in process and technology
                Radical
                Incremental
           Innovation in organization
                Radical
                Incremental                                            Entrepreneurs’ innovativeness
           Innovation in logistics                                     revealed through innovation
                Radical                                                achievements
                Incremental

            Quality standard
                  ISO 9001 and ISO 9002
            Sales of new products
            Cost reduction
            Financial improvement

 Figure 20: entrepreneurs; innovativeness revealed through innovation achievement

 In conclusion, entrepreneurs‘ innovativeness is gauged through the innovation achievements
 which contain but only the innovation in products, process & technology, organization and
 logistics but also the indices such as profit increase, cost reduction and quality status etc.

What will he do? ---- The strategic postures that he formed in the technology innovation strategy.

 Innovation strategy

 The Innovation strategy of an enterprise, the policy or the guideline formulated and followed by
 the entrepreneur in the course of its innovation movement, is defined on the basis of
 understanding the environmental challenges (technology trend, rivalry, market chance etc), its
 market position, technological trajectories, organizational process, and its innovation competence.
 Through the innovation strategy, the entrepreneur interprets the environment potentials, responds
 to those elements from the environments by making up countermeasures, one of which is to
 adopt a strategy suitable to the requirements of the environment and his business competence.
 Therefore, the innovation strategy is the reflection not only of the enterprise‘ factual situation of
 innovation but also the proof of the innovativeness possessed by the entrepreneur who manages
 the enterprise. The innovativeness of an innovation strategy is effectively clarified by using the
 theory of three dimensions of innovation strategy --- the innovativeness is expresses by
 measuring the innovation position in the three dimensions: degree of radicalness, degree of speed
 of commercialisation, and degree of originality.

The innovation strategy clearly indicates the methods through which the strategic goal is to be
realised, the level of innovation stretch and the degree of innovation involvement, which are
expressed by measuring innovation position in the three dimensions of an innovation strategy:
Radical vs. Incremental; Leader vs. Follower; Inventive vs. Imitative. (Joseph T.Gilbert,
‗choosing an innovation strategy: theory and practice). The tendency to favour each of the three
dimensions in the course of formulating the innovation strategy reifies the degree of
innovativeness possessed of by an entrepreneur.

Innovation is an inevitable means adopted by the entrepreneurs attempting to improve their
enterprises‘ performance and competence even though the innovation comes in various forms.
The degree of innovativeness is exhibited from the innovation strategy formulated by an
entrepreneur; the degree of the innovativeness of the innovation strategy he chooses may be less,
medium, or strong. The reading of the degree of innovativeness in his innovation strategy will be
surely available by measuring what the entrepreneurs intend to do in the three dimension theory
of innovation strategy: degree of radicalness, degree of speed (earliness) of commercialisation,
and degree of originality. Therefore, the entrepreneurs are always making their innovativeness
obvious when he chooses his stand in the innovation strategy formulated for their enterprises.
Consequently, the result measured in three dimensions of innovation strategy actually
demonstrates the degree of willingness held by an entrepreneur who intends to get the strategic
goals realised through the appropriate innovations.

Three dimensions of innovation strategy: degree of innovation; degree of creativity; degree of
speed of new products commercialisation.

Innovation can be characterized in a variety of ways. In the following sections ways of
describing innovations will be viewed: incremental vs. radical; first mover vs. late mover (leader
vs. follower); and imitative vs. inventive. The three categories are not mutually exclusive in

As it is mentioned, the innovativeness possessed by an entrepreneur always is revealed while the
entrepreneurs decide the innovation strategy for their enterprise. The environmental scanning
indicates the technology trends, potential application of new technologies, the rivalry from the
competitors in the industry, the market trends and customers‘ potential demands and the like, and
informs the entrepreneurs of the information to make their strategic decision. The different
results from the scanning of both external environment and internal business resources and the
different intention for the entrepreneurs to innovate their enterprises make it impossible for all
the entrepreneurs to take the same innovation strategy for their business. What is more,
Innovations come as both inventions and adoptions. They come in many types and vary greatly
in complexity and scope. It is an obvious fact that different companies take different approaches
to the use of innovation in attempting to improve their performance and competence.

1. Degree of innovation --- from radical to incremental

There are some innovations that are so minor they are barely perceived as changes. Clearly they
have no impact on a firm's basic strategies. At the other extreme, some innovations are so great

that they result in a fundamental change in the very nature of a business, leaving behind nothing
of the old business.

What is radical innovation?

   The technological break—through in products and process, different from the current
    availability, the change is so dramatic that it changes the rule of game in an industry.

What is incremental innovation?

 The technological improvement in and modification to the existing products and process,
    which aims to realise lower cost, stable quality, more functions and so on.

The innovation strategy turns to be more radical means the higher degree of innovativeness
possessed by the entrepreneur because he is willing to gather more momentum to build up the
dominance in his trade. The degree of innovation in the innovation strategy goes proportionally
with the degree of innovativeness held by the entrepreneurs.

2. Degree of speed of products commercialisation--- from first movers to late movers

Successful innovation does not merely means invention or creation of something new, innovation
have to be tested by the market, commercial success provide innovation with the destination that
all inventions or R&D results will have to arrive to, so the earliness for the new products to be
commercialised concerns very much with the success of innovation. Inventions are, by definition,
only introduced by one firm, or at most by a small handful of firms that bring a new product or
service to market simultaneously. Companies that attempt to introduce an invention should
logically stand to gain some substantial advantage, because there is a real risk of coming late to
the finish line and gaining no prize.

What are first movers?

       Companies that succeed in commercialising an invention are sometimes known as first
        movers, which are displayed in term of proprietary technology such as copyright and
        patent number and so on.

What are late movers?

       Companies that do not aim for invention, but innovate by adopting an invention that
        appears to be a winner, can be said to be late movers.

The more speediness or earliness of products commercialisation there is in the innovation
strategy, the higher the degree of innovation there exists in the innovation strategy. Since the less
time needed for the products to be in the market requires more inputs and higher improvements
achieved in the business operation, it is very necessary for the entrepreneur himself to make his
endeavours to get the improvements completed .The improvements will never be achieved
without the endeavours from entrepreneurs. Naturally, where there is more speediness of
commercialisation of the new products in his innovation strategy, there is a higher degree of

entrepreneurs‘ innovativeness involved in the course of products commercialisation. Moreover,
the speedy products commercialisation illustrates not only the successful organization which is
built or adapted for innovation carried out in the enterprise; suitable innovation strategy pursued;
competent innovation capability owned by             the enterprise but also the degree of the
entrepreneur‘ innovativeness.

3. Degree of creativity ---- from inventive to imitative:

The creativity or originality of the innovation actually implies the degree to which the
innovations imitate something already familiar or existent.

What is inventive?

   The source of innovation comes from creativity or originality that is completely different
    from what has existed. The inventive technology innovation means that the innovation in
    products, in process or in technology take place not due to imitating the existent but due to
    the novelty of invention, the changes in technology, products and process are so great that
    they are totally different from the current existing.

What is imitative?

   The source of the innovation comes from the imitation of the existing. The inventive
    technology innovation means that the innovation in products, in process or in technology
    takes place due to imitating the existent.

The higher degree of imitativeness there exists in an innovation strategy, the lower degree of
inventiveness there will be in it, the higher level of inventiveness in an innovation strategy, the
lower level of imitativeness in it. Inverse proportion exists in the relationship between the degree
of inventiveness and the degree of imitativeness.

The degree of difference from the existing implies the level of innovativeness in the innovation
strategy, the more different the innovation is from the existent, and the more inventive the
innovation will be. More inventiveness in the innovation strategy indicates more willingness will
be presented because more endeavours will be afforded by the entrepreneur expecting his
enterprise of something inventive, thus higher degree of the innovativeness held by the
entrepreneur is displayed from his contributions to the innovation in this dimension.

                                              Degree of innovativeness: Radical vs. Incremental

                                                                     Degree of earliness of commercialisation: Follower vs. Leader

  Degree of originality: Inventive vs. Imitative

                                                                               Figure 21: Three dimensions of the innovation strategy

Most companies pursue an innovation strategy that falls somewhere among the three dimensions,
the choice of an innovation is not only influenced by the rivalry in the industry, the historical
trajectory of the enterprises, the resources and competence of the enterprises but also the
innovativeness of the entrepreneurs who are the strategic decision makers of their business.

Innovations that are radical, inventive, and early have some characteristics in common. They
typically require more planning and effort, and involve higher cost and risk of failure. But they
also frequently offer greater rewards and performance improvement if they succeed. Great
tolerance on failure, more inputs to encourage the innovation, strong focus on the key innovation
that will change the competitive structure of an industry are required for the entrepreneurs who
choose an innovation strategy with high degree of innovativeness, originality and earliness of
commercialisation. On the other hand, innovation that are incremental, imitative, and relatively
late have different characteristics from those described above, they require the ability to improve
on another firm‘s innovation --- that is to deliver a product or service at relatively high volume
and low cost. The innovation of this type is easier to achieve, commercial success is emphasized,
and attention is devoted to competitors because adoption of the innovations of others is stressed.
Accordingly, the innovativeness held by the entrepreneurs will be exhibited through the
innovation position they adopt in the three dimensions of the strategy. The degree of the
innovativeness held by the entrepreneurs will surely be available by measuring the three
dimensions of the innovation strategy

Summing up the above -- mentioned aspects, higher degree of speed of products
commercialisation, which also is regarded as higher level of new products‘ earliness to enter
market (less time needed to realize commercialisation), implies the higher degree of
innovativeness of the innovation strategy; Higher degree of creativity, which also means the
higher degree of inventiveness (distance from the existing), indicates the higher degree of
innovativeness in the innovation strategy. Higher degree of radicalness (technology breakthrough
and radical development) displays higher degree of innovativeness in the innovation strategy.
That is to say, the entrepreneurs‘ innovativeness is diagnosable by measuring the position in the
three dimensions of innovation strategy.

Conclusively, the innovation strategy that an entrepreneur adopts can present the degree of his
innovativeness in term of innovation strategy. The level of innovativeness of the entrepreneurs
in term of innovation intention will be able to measured on a Likert 7 – point scale which
displays the ratings from three dimensions of the innovation strategy .The averaged score from
the degree rating from the three dimensions indicates the degree of the innovativeness in his
intention to innovate.



                Degree of innovativeness      Degree of originality    Degree of earliness of commercialisation

                                                    Figure22: the posture in three dimensions of the innovation strategy.

       Variables from 3 dimensions                                    Measurable Indicators

       1. Radicalness                                    Degree of innovativeness

       2. Speediness                                     Degree of speed of commercialisation

       3. Creativity                                     Degree of originality

                          Figure 23: the variables & measurable indicators of the three dimensions of the innovation strategy.

The entrepreneurs’ efforts to innovate their business in future

       Due to the perception of the importance of the innovation, entrepreneurs must take measures
       to implement future innovation in their enterprises; these measures briefly include the actions
       to be taken for the organization building and adjustment, allocation of investment to the
       innovation reinforcement etc. Thus, entrepreneurs‘ innovation intention is also expected to be
       revealed through the assessment of their efforts for the realization of the future innovation
       objectives in their enterprises; the entrepreneurs‘ efforts intended for the future innovation
       mainly includes their efforts for organization building or adjustment, efforts contributed to
       the future innovation capability etc. The facts from the following two aspects are the most
       essential evidence indicating the entrepreneurs‘ degree of innovativness.

          Organization building and adjustment

    As was discussed in the previous section, in a managerial prospective, an enterprise is an
    organization where business operation is carried out under management in various sorts,
    innovation will hardly be able to generate, develop and ‗bear fruits‘ without, from a positive
    organization, the support and nourishment towards innovation. Therefore the establishment
    of an innovation nurturing organization concerns very much with the success of innovation.
    The most representative features that indicate the essence of an organization which fosters
    innovation mainly include the creativity and creative climate, team work and cooperation,
    flexibility and speediness from the response to changes, interaction with outside sources,
    efficiency of internal communication, and the presence of key innovative individuals etc.
    Entrepreneurs‘ innovation efforts will definitely be made known through their measures
    premeditated to innovation oriented organisation building and adjustment.

     Contributions intended for realization of future innovation
    Innovation will always be doomed not to succeed without any physically materialised support.
    To accomplish the goals formulated in the innovation strategy or planning, entrepreneurs
    must invest to improve the innovation capability of their enterprises. Investment to
    innovation capability improvement certainly is a major indicator showing entrepreneurs‘
    innovativeness, but entrepreneurs‘ efforts made for the reinforcement of other capabilities
    also expose their innovativeness because innovation, which is considered to be carried out in
    a complicated context, needs contribution devoted from the R D capability, manufacture
    capability, marketing capability, and management capability .

             Entrepreneurs‘ innovation
              intention in the innovation
              strategy or planning

                                                                        Entrepreneurs‘ innovativeness in
             Entrepreneurs‘ innovation                                 the aspect of innovation
              contribution towards the                                  intention
              realization of future innovation
                   Organisation building and
                    adjustment for future
                   Contributions for future

Figure 24: evaluation of entrepreneurs’ innovativeness in the aspect of future intention


    Principally, entrepreneurs‘ intention and conductions towards innovation are utilized as the
    mirror reflecting entrepreneurs‘ innovativeness, analysis or evaluation of the facts concerning
    entrepreneurs‘ efforts made in the past, the innovation achievements through innovation
    efforts and entrepreneurs‘ intention are a plausible approach exhibiting entrepreneurs‘
    innovativeness in a trustworthy and comprehensive way.

        Innovation can not be understood without careful attention to the personal, organisational,
        technological, and environmental contexts within which it takes place (Tornatzky and
        Fleischer, 1990), the innovativeness of entrepreneurs will always be displayed by measuring
        their contributions to the innovation undertakings such as strategic posture selection in
        innovation strategy and the efforts planned for the realization of the future innovation in their
        enterprises, the organisation formulation or adaptation, the effort made to the support
        innovation capability and the innovation outputs. That is to say, to measure the
        innovativeness of an entrepreneurs will be accomplished by the checking what he intends to
        do in the innovation strategy or planning, how he does in his management over the
        innovation in the organization, what he has done to improve the innovation capability of his
        business, and what are the innovation outputs in his business.

Assessment of entrepreneurs‘      Assessment of the innovation      Assessment of the entrepreneur‘s
efforts made for innovation       accomplishments achieved          efforts and measures planned for
in the past                       through the efforts of the past   the future innovation in his

                                                                                                       Aggregated assessment
                                                                                                       reflects the entrepreneurs‘

   Figure 25: assessment of entrepreneurs’ innovativeness

        Variables and measurable indicators, which typically represent the essence of entrepreneurs‘
        innovation efforts made in the past for the improvement of innovation capability, innovation
        achievements made by the efforts from entrepreneurs, and entrepreneurs‘ innovation
        intention and efforts for the future innovation, these variables and measurable indicators
        determinate the innovation strategy, organization adaptation to the innovation and
        contingency, the innovation capability and strength, are analysed and listed to form the
        measurement instrument gauging the innovativeness held by the entrepreneurs.

        In this article, the degree of the innovativeness of an entrepreneur is suggested to be analysed
        from three aspects: his intention of innovation which is displayed in his innovation strategy
        or planning and their efforts planned for the future innovation; his action in implementation
        which includes his commitment towards innovative organisation building or adoption aiming
        to accelerate the innovation mechanism by carrying out series of measures; the commitment
        towards innovation capacity improvement which involves innovation investment capability;
        R&D capability; marketing capability; manufacture capability and the like, the achievements
        acquired by an enterprise through innovation are not only the indicators show its innovation
        capability but also undoubtedly the evidence proving the innovativeness processed by the

        The position the entrepreneurs take in innovation strategy is measured in the three
        dimensions for the scaling on its degree of innovativeness, by rating the innovativeness in the
        innovation strategy he formulated or adopted, the entrepreneur‘s innovativeness is also
        measured; The entrepreneurs‘ commitment and contributions to the innovation building are
        the physical proof manifesting the entrepreneur‘s degree of innovativeness, the variance in

the effort from them will mark the level of innovativeness possessed by each entrepreneur.
The discrepancy in the fruition from innovation indicates the differentiation in the level of
innovation capability held by enterprises; accordingly it represents the personal individual
degree of innovativeness because the innovation outputs and innovation strength of an
enterprise are also the result from the entrepreneur‘s personal innovativeness.

The diagnosis on personal innovation intention, innovation effort, and innovation outputs will
present a relatively comprehensive evaluation on the degree of an entrepreneur‘s
innovativeness; innovation is a very complicated process which is involved in the business
managerial activities. The innovation capability owned by an enterprise and the innovation
outputs have a lot to do with the entrepreneur‘s awareness of the environment and desire for
innovation, and they are the results of the entrepreneurs‘ attemption and endeavours to
innovate. The measurement on what an entrepreneur contributed to the innovation capability,
the innovation achievements of his business, entrepreneurs‘ innovation intention and their
efforts intended for the future innovation in their business is the most convincing and most
manipulateable method through which a comprehensive and comparatively trustworthy
description is expected to be made available。


   Joseph T. Gilbert, ―Choosing an Innovation Strategy: Theory and Practice‖ (Business
   Horizons 1999)

   Rosanna Garcia, Roger Calantone, ―A Critical Look at Technological Innovation Typology
   and Innovativeness Terminology: a Literature Review‖ (the Journal of Product Innovation
   Management 2002)

   Aysegul Ozsomer, Roger J. Clantone and Anthony Di Benedetto, ―What Makes Firms More
   Innovative? A Look at Organisational and Environmental Factors‖ (Journal of Business &
   Industrial Marketing, 1997)

   J T. Hage, "Organisational Innovation and Organisational Change‖

   John Coopey, ―Managers‘ Innovations and the Structuration of Organisation‖ (Journal of
   Management Studies May 1998)

   Carol M Sanches, ―Environmental Regulation and Firm—Level Innovation‖ (Business &
   Society June 1997)

   Wangxiang ―Technology Innovation Management‖ (Qinghua University Press, 2001.)

   Joe Tidd, John Bessant and Keith Pavitt ―Managing Innovation Integrating Technological,
   Market and Organisational Change‖ John Wiley&Sons 1997)

   ―European Competitiveness Report 2001‖ European Commission (http://europa.eu.int)

   Anton Cozijnsen and Willem Vrakking ―Handbook of innovation management‖ (Basil
   Blackwell Ltd, 1993)

G. T. Lumpkin, and Gregory G..Dess ―Clarifying the Entrepreneurial Orientation construct and
Linking It to Performance‖ ―Academy of Management Vol. 21 1996


To top