CHAPTER 8

Section A: True or False Question

1. T
2. T
3. T
4. T
5. T
6. F
7. F
8. F
9. T
10. F
11. T
12. F
13. T
14. F
15. F
16. F
17. T
18. T
19. F
20. F
Section B: Essay Question
1. Define internal and External sources of innovation.
Internal – Changes within the organization. This might be small or large change,
something structural within a team, a change in the production process to increase
efficiency, or something financial regarding budget. However, is done primarily
within the organization, although the impacts may be visible both within the
organization and outside of it.
External - This means improvement to a product or service, for example, which
directly impacts the customer. This may mean introducing new systems of service or
the implementation of a new product line to better meet your customers ever-evolving
needs.

2. How can process needs lead to innovation?

The innovation process describes the systematic conversion of existing and new
findings into marketable solutions from idea generation and idea evaluation to
 implementation and successful market launch. It is also important to discard ideas
with little future potential in good time, to make targeted use of R&D resources and to
focus innovation activities on promising innovations. In addition to the innovation
process, holistic innovation management must also include the strategy, structure and
innovation culture of a company. These four areas are closely interlinked and require
appropriate coordination when it comes to the consistent design of sustainable
innovation management in the company.

3. What are spill-over? How can spill-overs contribute to innovation?

Spill-overs is an exchange of ideas among individuals. In knowledge
management economics, knowledge spillovers are non-rival knowledge market costs
incurred by a party not agreeing to assume the costs that has a spillover effect of
stimulating technological improvements in a neighbor through one's own innovation.
Such innovations often come from specialization within an industry.
In 1980 Alfred Marshall developed knowledge spillover theory that was further
finalized by Kenneth Arrow and Paul Romer and named “MAR spillover” after its
authors. According to that theory, concentration of firms in one sector (industry)
facilitates scientific knowledge transfer between firms encouraging growth and
innovation. Employees of different companies of the same sector (industry) exchange
ideas of new products and processes.

4. What do advantages do users have as sources of innovation?

- improved productivity
- reduced costs
- increased competitiveness
- improved brand recognition and value
- new partnerships and relationships
- increased turnover and improved profitability

5. Explain the concept of employee-driven innovation (EDI).

Employee driven innovation is the systematic use of employees’ ideas, knowledge
and experience to improve innovation capacity in the organization, resulting in new
products, processes or services, developed in an open and including innovation
processes.