Innovation and Creativity Used by Private Sector Firms in a Resources-Constrained Environment

Entrepreneurship, Innovation, Creativity, Competitive Advantages, And Knowledge

The concept of innovation has found to be an important factor in economic performance at the national, firm, and individual levels by many experts worldwide. The roles of innovation and entrepreneurship have often been called the cornerstones of social and economic development. At the macroeconomic level, the early work of Schumpeter (1934) recognized entrepreneurship and innovation as the key factors in driving economic development and growth. The recent exploration of innovative firm performance by Tuan, Nhan, Giang, and Ngoc (2016), suggested the higher the number of the innovative activities, the greater the innovative output and overall performance. The authors also explored ways businesses can contribute to national output and economic growth and how these outcomes are related to their innovative abilities. The key factors driving innovativeness in a business are a desire to increase organization performance and gain a competitive edge (Tuan, et al.). Moreover, innovation has often been found to be a main factor in the survival of particular businesses, and organizations in general.

Schumpeter (1934) felt to create economic growth a nation needs innovation. In a business setting, innovation is seen as the development made by one or more individuals which generates new sources of profit and, as a result, produces long-term economic gain. Innovation does not only include the creation of something completely new and novel, but also includes combining and using existing knowledge in new and unique ways. Van de Ven (1986) indicated innovation was not usually the product of a single entrepreneur; instead, it was most often the result of the efforts of a network of individuals joining together to create and implement new business ideas which build upon existing knowledge. Innovation does not imply creating something out of nothing, and innovation can take both a radical form which creates entire new products or ideas, or an incremental form which implies making small improvements or adjustments to existing practices to align with different or changing environmental conditions.