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

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ABSTRACT

 

The study investigated the relationship between innovation and organizational resilience in selected manufacturing firms in Enugu state, Nigeria. The study aimed to achieve the following specific objectives: to determine the extent to which process innovation affect organizational response; to ascertain the effect of product innovation on business vulnerability; to determine the nature of the  relationship between service innovation and adaptive capacity; and to ascertain the extent of the relationship between radical innovation and organizational recovery. The study was conducted using the survey design. The population of the study was 1400 employees from Nigeria Breweries Limited, Innoson Technical and Industrial Company Limited, Juhel Nigeria Limited. A sample of 302 respondents was drawn from the population using Stat Trek’s planning wizard tool. The sources of data were both primary and secondary. The primary data were collected through questionnaire and interview schedule while secondary data were sourced from relevant journals, textbooks and internet materials. Questionnaire as the instrument for data collection was designed on a five-point likert scale according to the objectives of the study. Content validity was used to ensure that the variables were adequately covered. The reliability of the instrument was done through the use of pilot study yielding a reliability index of 0.89 which indicated a high degree of items consistency. Regression analysis was used to test hypotheses one and two while Pearson Product Moment Correlation was used was used to test hypothesis three and four. The study found that process innovation affects organizational response to a great extent; product innovation significantly reduces business vulnerability; there existed a positive relationship between service innovation and adaptive capacity; there is a significant relationship between radical innovation and organizational recovery. The study concluded that when innovative activities are encouraged in organizations, it enhances the resilient stance and capacities of the organization. Based on the findings of the study, it was recommended that organizations through institutionalized policies can effectively manage their innovative tendencies and activities; organizations should create an enabling environment which encourages employee creativity and innovative capacities.

 

TABLE OF CONTENTS

Declaration                                                                                                                  ii

Approval                                                                                                                     iii

Dedication                                                                                                                  iv

Acknowledgements                                                                                                    v

Abstract                                                                                                                      vi

List of Tables                                                                                                              ix

List of Figures                                                                                                             xi

 

CHAPTER ONE: INTRODUCTION

1.1       Background of the Study                                                                               1

1.2      Statement of the Problem                                                                                    4

1.3       Objectives of the Study                                                                                  4

1.4       Research Questions                                                                                         5

1.5       Research Hypotheses                                                                                      5

1.6       Significance of the Study                                                                               5

1.7       Scope of the Study                                                                                         6

1.8       Limitation of the Study                                                                                  6

1.9       Operational Definition of key terms                                                               7

1.10     Profile of the selected Manufacturing Companies in Enugu State                 8

            References                                                                                                      12

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1       Conceptual framework                                                                                   14

2.1.1    Innovation.                                                                                                      16

2.1.2    Dimensions of Organisational Innovation                                                      20

2.1.3    Product Innovation                                                                                         22

2.1.4    Process Innovation                                                                                          23

2.1.5    Service Innovation                                                                                          25

2.1.6    Drivers of Innovation                                                                                     26

2.1.7    Organizational Resilience                                                                               27

  • Measures of Organizational Resilience 30

2.1.9    Innovation Killers in Organization                                                                 49

2.1.10  Models of Innovation                                                                                     52

2.2       Theoretical Framework                                                                                   56

2.21     Diffusion of Innovation Theory                                                                     56

2.22     Theory of Economic Innovation                                                                     58

2.3       Empirical Review                                                                                            58

2.3.2    Activities Relating to Resilient Organizations                                                60

2.4       Summary of Review Related Literature                                                         62

References                                                                                                   63

 

CHAPTER THREE:  METHODOLOGY

 

3.1       Research Design                                                                                             68

3.2       Sources of Data                                                                                              68

3.3       Population of the Study                                                                                  68

3.4       Sample Size Determination and Sampling Technique                                    69

3.5       Description of Research Instrument                                                               71

3.6       Validity of the Research Instrument                                                              72

3.7       Reliability of the Research Instrument                                                           72

3.8       Data Analysis Techniques                                                                               74

3.9       Decision Rule                                                                                                  74

            References                                                                                                      75

 

CHAPTER FOUR

 

4.1       Presentation and Analysis of Data                                                                 76

4.2       Questionnaire Analysis                                                                                   76

4.3       Test of Hypotheses                                                                                         83

4.4       Discussion of Results                                                                                      93

References                                                                                                    95

 

CHAPTER FIVE: SUMMARY OF MAJOR FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1       Summary of Major Findings.                                                                          96

5.2       Conclusions                                                                                                     96

5.3       Recommendations                                                                                          96

5.4       Contribution to Knowledge                                                                            97

5.5       Suggestions for further Studies                                                                      97

Bibliography

Appendices

       

                                                            LIST OF TABLES

Table 3.1         Population Distribution                                                                                   69

Table 3.2         Summary of the proportionate stratified sample drawn for the study           71

Table 3.3         Reliability Test using Test Retest Method                                                      73

Table 4.1         Questionnaire Distribution                                                                              76

Table 4.2         Investment of Fund and Development of New Ideas                                                76

Table 4.3         Investment of Time and Development of New Ideas                                                77

Table 4.4         The Lead in the New Process of Doing Things                                              78

Table 4.5         Effective Communication and Enhancement of Process                               78

Table 4.6         Modern Technology and Quick Response to Organizational Process            79

Table 4.7         Engagement of Employee and Development of Novel Ideas                                    80

Table 4.8         The Lead in Novel Products and Firms Sustainability                                   80

Table 4.9         Enabling Environment and Production of Novel Products                            81

Table 4.10       Good Funding and Production of Novel Products                                        82

Table 4.11       New Products and Protection in Crisis Situation                                           82

Table 4.12       New Ideas and Adaptability to Environmental Challenges                           83

Table 4.13       Novel Products and Increase in Organizational Flexibility                            84

Table 4.14       Improved Factory Production Time and Increase in Organizational                                                  Adaptability                                                                                                    84

Table 4.15       Alteration of Structure and Recovery                                                                        85

Table 4.16       Incorporation of New Systems and Bouncing back                                       86

Table 4.17       Diversification of Product Line and Recovery                                               86

Table 4.18       Horizon Scanning and Reduction of Risk                                                      87

Table 4.19       Model Summary                                                                                             88

Table 4.20       Anova                                                                                                             88

Table 4.21       Coefficients                                                                                                    89

Table 4.22       Model Summary                                                                                             90

Table 4.23       Correlations                                                                                                     91

Table 4.24       Descriptive Statistics                                                                                      91

Table 4.25       Correlations                                                                                                     92

 

LIST OF FIGURES

Figure 2.1        Tangibility and Customer Contact                                                                  21

Figure 2.2        Sequential and Cumulative Antecedents to Rent                                           55

Figure 2.3        A Model of Antecedents to Rent                                                                   55

 

CHAPTER ONE

INTRODUCTION

  • Background of the Study

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

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

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

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

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

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

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

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

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

 

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