“E-Novation” is defined as a combination of innovation and e-marketing enabled by new collaborative platforms that are being developed and released using Web 2.0 methodologies, allowing for a different level of connectivity around the world. This chapter explores innovation and its contribution to firm performance, links to market orientation – and development of a new collaborative information platform to support innovation. E-marketing is also defined in terms of marketing in computer-mediated environments with emphasis on service-dominant logic (SDL) and collaborative value creation approaches. Aspects of the evolving new collaborative information platform such as the Semantic Web and Web 2.0 applications are discussed from e-marketing and innovation perspectives. Will “e-novation” challenge businesses to rethink how their employees will create or participate in collaborative groups with others where future revenue prospects appear to mainly from service development? This question is also explored through subsequent chapters in the book.
TopInnovation within a firm is seen as having a positive impact on the economy (Teece 2002) as well as being a key element in the entrepreneurial process (Schaper and Volery 2003). Many definitions of innovation can be found in the literature; Zaltman, Duncan and Holbeck (1973), Damanpour and Fariborz (1984), Damanpour (1991) and Boer and During (2001) all provide definitions of innovation. Each of these has a common theme that the item being innovated must be new to the target audience. It has also been suggested that when viewed as a process, innovation may be culture specific (Sawy, Eriksonnen, Raven and Carlsson 2001).
Innovation, or at least the firm’s capacity to innovate, is a characteristic that has been shown as having a relationship to firm performance. Studies have found, for instance, that successful product and process innovation has a positive link to firm performance (Caves and Ghemawat 1992). New product development can lead to increased market share (Zahra and Covin 1983) and product innovation has been linked to increasing market share (Banbury and Mitchell 1995). Yamin, Gunasekaran and Mavondo (1999) studied innovation and firm performance on Australian manufacturing companies and found a link between financial performance and innovation performance.
The literature indicates therefore that there is a positive relationship between firm innovativeness and firm performance, with many authors suggesting innovation as a firm strategy to achieve superior performance. However, one can conjecture that there may be both internal (to the firm) and external influences on firm innovation performance and the motivation to innovate.
One such internal influence identified within the literature is the concept of market orientation, which has also been shown to have a positive relationship to firm performance. Market orientation refers to the organization-wide generation, dissemination, and responsiveness to market intelligence (Kohli & Jaworski 1990). Shapiro (1988) suggests that a number of areas of the business other than marketing participate in all three functions; hence, the function is wider than the marketing department. By this they mean that “market orientation entails (1) one or more departments engaging in activities geared toward developing an understanding of customer’s current and future needs and the factors affecting them, (2) sharing of this understanding across departments, and (3) the various departments engaging in activities designed to meet select customers’ needs.”