The Importance of HEIs and Firm Relationships in Innovation-Driven Models

The Importance of HEIs and Firm Relationships in Innovation-Driven Models

Marko Slavković (Faculty of Economics, University of Kragujevac, Serbia) and Petar Veselinović (Faculty of Economics, University of Kragujevac, Serbia)
DOI: 10.4018/978-1-7998-2708-5.ch008

Abstract

The current paradigm of change, which is essentially based on the digitization and greater application of modern ICT, is changing the established patterns of business, not only in firms but also in other industries that are important for the functioning of a society. In the era of rapid change, innovation is qualified as the “key” to comparative advantage. Innovation is certainly a central and decisive factor in current competitive relations and, as such, it seeks a strong link between higher education institutions and firms in the practical field of action. Therefore, the main goal of the article is to map the domains of cooperation between higher education institutions and firms, through the identification of innovative processes, on the basis of which it is possible to determine their character and directions for enhancing innovation capacities, both at the micro and macro level.
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Introduction

Changes embodied in the digitization and increasing use of ICT solutions have taken place in society in recent decades. They have significantly changed the way of life of an individual, but also the way of doing business. In order to meet the needs and to get through in the modern business environment, the development of new products and services has been noted, which makes innovation an essential factor in social and economic progress (Dodgson & Gann, 2010; Schumpeter, 1942). Policy makers have come to the conclusion that solutions based on the old paradigm of efficient accumulation of traditional resources will not be enough and that the survival of businesses based on this paradigm is almost impossible. Instead, intangible assets, that is, intellectual capital, in which human capital stands out as the most important component, surpassing land and labor as major drivers of economic growth (Goh, 2005), are gaining importance.

The significant changes that have taken place have led to the transformation of the way of life of individuals and business, while at the same time creating a need for new products and services, which can only be met by fostering innovation. In the context of numerous economies, technological innovation is cited as the most important driver of competitiveness, as evidenced by the fact that a large proportion of modern firms rely on these products, which generate almost a third of total sales and profits (Barczak, Griffin & Kahn, 2009). However, in addition to technological innovation, there are innovations that involve the creation, acceptance and implementation of new ideas, processes, products or services (Thompson, 1965). Thus, innovation is not only found in the activities that companies perform, but also in their processes (Dodgson & Gann, 2010).

There is no unique definition of this phenomenon in the literature (Ariss & Deilami, 2012) and a significant portion of the academic public has resorted to presenting innovations according to the needs of studies and research conducted (Garcia & Calantone, 2002). In addition, the given problem area is complex since innovations continue to be associated with high failure rates, which is largely due to a limited understanding of the causes and consequences of the processes implemented (Goh, 2005). However, despite the obstacles in valorizing innovation and the difficulties in measuring the innovation capacity of firms, it is impossible to neglect the importance of innovation for the economic development of a country. On the one hand, innovation, which affects economic growth, refers to the effective use of scientific, technical, organizational and management tools. On the other hand, the government must not only take care of enhancing efficiency and productivity, but must enable firms to increase entrepreneurial opportunities by finding innovation. The reasons cited above indicate the undoubted importance of transformation in today's business world, which has contributed to the development of an innovation-based economy.

Key Terms in this Chapter

Innovation: A process of translating an idea or invention into a good or service that creates value which customers are ready to pay for.

Federation: A group of entities which involves centralized power and functions.

Confederal Structure: Implies a high level of formalization and a relatively stable form of organization, within which its constituent elements retain complete autonomy.

Alliance: Refers to decentralization, ie. power and functions are specific while everything else is centralized. The alliance is not a merger, but each member institution registers separately, has its own personnel structure and organizational units.

Technological Innovations: Comprise new products or processes that make significant technological changes of products.

Innovation-Driven Economy: Are the most developed economies, which implies more knowledge-intensive businesses and service sector expands.

Consortium: Is a formal way of organizing cooperation between higher education institutions and companies, which are separately set up, have their own assets, a board of directors and rules such as independent organizations.

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