Comprehensive study on internal drivers of innovation

Abstract

Innovation in companies has been recognised as one of the sources of competitive advantage in companies. Innovation has been seen across different value chain aspects ranging from advanced cost reduction strategies to new and improved products. Many factors play a role in making the firm more innovative with respect to its peers. These factors may be broadly classified into external and internal factors. External factors aiding in improving the firm's innovativeness include market-related factors such as changing customer needs and pressure from competitors. Other external factors that may drive innovation in a company or an industry, in general, include changes in technology and even changes in laws and regulations. Internal factors that may bolster innovation include research and development facilities, the expenditure thereon, educational qualification and background of employees, and its overall strategy. Some other internal factors that may influence innovation include the number of years of experience in the company, performance rating, match between the formal education and organisational role.