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The role of information technology in improving innovation

2196 words (9 pages) Essay in Business

5/12/16 Business Reference this

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Informational age intensely confronts organizations to execute innovation activity in a coherent and universal manner in order to maintain a competitive edge against competitors and for their continuous effectiveness. Innovation activity is like a fundamental component for survival, profitability and growth of organizations, and information technology helps provide an important function and acts as a facilitator to promote and develop innovation. The use of informational technology, IT in significant areas is a task of extensive importance and value due to the innovation imperative for organizations to obtain and maintain market advantage over competitors’ as well internal organizational enhancement. For any organization, generation of ideas requires creativity and goes along side with knowledge of IT which to help change its ability to adapt new ideas through the use of related technology. Generally, Innovation is understood as the successful introduction of a new thing or method. Innovation is like a combination or synthesis of knowledge in original, relevant valued new products, processes or services (Luecke and Katz, 2003). Innovation is a nonstop improvement of self-development, idea making and management of its technological advantage and economic benefit on the market Innovation is a constant process of self-prepay, idea generation and management of its technological advantage and economic benefit on the market (Borisz. Szanto, 1996). Although In the organizational context, innovation was linked to performance and growth through improvements in relative to productivity, quality, competitive positioning, market share etc. All organizations innovate, including for example hospitals, universities and local governments. All these organizations need to utilize IT to improve their efficiency in materializing their innovative ideas.

This draft proposes a literature review on how information technologies help to facilitate knowledge sharing and creation to advance innovation in organizations. The minor review will also argue the advantage of information technology in the development innovation.


This research paper examines the role of information technology in improving innovation in organizations. This is a vast multi-disciplinary area of research and is relatively a new area of inquiry.

The objectives of this research are

1. To have an insight into how information technology facilitates knowledge sharing and creation to improve innovation in organizations.

2. To understand the current state of research through analysis and synthesis of academic research papers.

3. To determine the role of Information Technology in smoothening the process of innovation in organizations.

Reason for Innovation

The world is hovering for a huge increase in the rate of innovation as a result of the improved sharing of information and joint possibilities opened up by the internet. Organizations should be leading performers in this massive global renovation, rather than be a mere spectators (Estrin, 2009).Development and use of IT is becoming a fundamental infrastructure for all econo6mic activity. Information and communications technology has a major role to play in motivating innovation and competitiveness for miniature businesses and the IT sector itself. Information technology helps in diminishing costs, enable more proficient deployment processes and bring products to market more competently than in the past. The lines between IT and processes innovation are vague impression. However, the difference between processes and product becomes obsolete. Companies cannot grow through cost reduction and re-engineering alone but innovation is the key factor in providing top-line growth, and for increasing bottom-line results (Davila et al., 2006).Equipping the employees with the rightful skills and gaining access to high-tech infrastructure are also essential. The full potential of Information technology is to be binding together. There are different blockade to the full use of IT in isolated areas and in many parts of the developing countries like lack of broad-band facilities and low standard workforce that has no proper training on how to embrace emerging technologies. There will be a positive relationship between organization’s utilization of information technology in innovativeness and its performance. Efficiency improvements will enhance the information processing capability of the company, enabled by the systematization and centralization of information management and the acceptance of standard approaches to the codification and processing of information. Through a widespread integrative IT infrastructure, information that used to be functionally obscured became available throughout the organization in a predefined format (Wagle, 1998). The investment in IT can act as a driver for economic improvement. The future of innovation in the IT sector lies on sustainable development.

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Types of innovation

According to Gopalakrishnan and Damanpour, there are three types of innovation. They are products versus processes, radical versus incremental, and technical versus administrative. All these types of innovation are related to the execution of information technology at different stages and in different ways. The ability of a user to innovate is improving thoroughly and rapidly as a result of the steady improved quality of computer software and hardware and enhanced access to accessible tools and components for innovation. Management with knowledge and technology results in the failure of innovation. Well-informed management systems give emphasis on how firms can enhance competitive advantages in the course of more effective use of their knowledge resources. This is achieved by the free flow of knowledge across organizations (Starbuck, 1992). During improved knowledge sharing and creation, flexibility and innovation should be enhanced (Von Krough, Ichijo and Nonaka, 2000).

Innovation comprises of not just distinct concurrences but a constant flow of events. It is a more complex concept than many realize and executives must be aware of the organization’s specific content of variables and their interaction (Tang, 1998). For the last fifteen years, there have been some vital debate among academics in management and related fields concerning what many professed as hastening innovation pace, limitation technology, and product life cycles, increasing instability in sales and profits, and changing patterns of business or production rivalry, especially in industries described as “high technology” or “new economy” or technology severe industries.

Thomke outlines six ethics organizations can follow to unlock their innovation potential.

1. Look forward and exploit early information through front loaded innovation processes.

2. Run experiment frequently but do not overload the organization.

3. Put together new and traditional technologies to unlock performance.

4. Organize for rapid experimentation.

5. Fail early and often but avoid mistakes.

6. Handle projects carefully as experiments.

Organizations/companies should follow these principles in using information technology to improve their performance and have a competitive edge in the market. Rigby and Zook (2002) pointed out four key benefits: the inflow of tangential and new ideas may lead to innovation; the outflow of ideas may create revenues as well as attract new talents; the early explanation of an idea to the market allows firms to evaluate interest and expand important insights in respect to increase investments; and lastly, the inflow and outflow of ideas allows a company to discover and focus on its main innovative resources.

Great Technological Challenges Require More Innovative level of Response.

Innovation research is originated from many fields of knowledge including management, psychology, economics, sociology and science. In spite of these and other disciplines, researchers are liable to conceptualize innovation and reinforcing innovation in diverse ways (Gopalakrishnan and Deveonpour, 1997, Tang, 1998). Increasing learning opportunities seems to be the key basis for internationalizing research and development programs, but while there is some correlation between research and development (R&D) spending and technological innovation, the relationship is not always direct. Besides, research and development is only one pathway to the generation and achievement of the knowledge (i.e., learning). High technology and fast changing industries require enormous amounts of R&D investment and are related with high risk. As a result, firms in high-tech industries are likely to work in partnership with other firms (Miotti and Sachwald, 2003). Likewise, companies that need a wide display of competencies to run innovation processes (e.g. multimedia companies) often build connection with external companies (Gassman, 2006). Kodama emphasize “the increasing relevance of converging technologies (e.g. bioinformatics) that force companies to share knowledge and experience”. Within the extensive debate on the approaches for managing knowledge in organizations, information technology (IT) is often mentioned as one of the anchors for knowledge management activities (Alavi and Leidner, 2001; Nonaka andTakeuchi, 1995). Knowledge administration requires the introduction of decisive factor to identify vital knowledge and to direct the factors and conditions that guide the activities of knowledge creation, integration and uses (Dibella and Nevis, 1998).As the product development process is a knowledge intensive work, IT can be considered as an sophisticated tool that enhances the volume of data, information and knowledge that can be processed throughout the product development process (Nambisan, 2003). Technical knowledge resources like information technologies and a custom of learning and knowledge transfer enhances creativity, directness to new ideas, experimentation, constant improvement of individual knowledge, risk-taking behavior or system opinion. A McKinsey survey found that twenty percentage companies have opened up their innovation processes to employees and customers and they report a twenty percentage rise in the number of innovations, on average.

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Basic knowledge is like prerequisite for developing creativity and innovation – educational institute must transmit this basic conceptual tools. It seems that creativity and innovation cannot be developed by premature specialization – since basic general knowledge is required, with attention to the contributions of various fields (natural sciences, social sciences, the arts), in order to form an understanding of the world and boost creativity and innovation.¬†Encouraging creativity and innovation must achieve the objectives of both equity and quality. The reverse is also true, creativity and innovation as the fundamental principles of modern schooling can be achieved only by adhering to both these objectives. Motivating individual’s creativity is one of the fundamental principles of inclusion: given that creativity is a fundamental feature inherent in every human being, all of us should be invited to enhance this aspect.

Without doubt, the principle of creativity and innovation is precisely what encourages striving for excellence. This principle of creativity and innovation cannot be developed in a non-democratic environment. Critical and indispensable, however, is redefining the role of the teacher – the teacher no longer as the fount of all truth, but rather a co-creator in the learning process, in which students’ responsibility for their own learning should also be enhanced. Economic elasticity depends on the competence of people, firms and governments to innovate. Individuals need some new kinds of proficiency, technical skills and understanding. Firms should develop, approve and become accustomed to advanced services, products, processes and habits of working. Governments must create policies and set structure for innovation and tackle the social, technical and ethical challenges set by nature, nano-technology, communication and other technologies. Developing technologies should confront our understanding of what administration can do, what comprises an organization, even what it means to be human.

Work Cited

Andrew P, Mcafee. (2009), Enterprise2.0: New Collaborative Tools for Your Organizations’ Challenges, Harward Business Press.

Alavi, M. and Leidner, D.E. (2001), “Review: knowledge management and knowledge management systems: conceptual foundations and research issues”, MIS Quarterly, Vol. 25 No. 1, pp. 107-36.

Basadur.M. 1995, “The power of innovation, How to make innovation a way of life”, Pitman Publishing, London.

Davila, Tony; Marc J. Epstein and Robert Shelton (2006), “Making Innovation Work: How to Manage It, Measure It, and Profit from It”, Upper Saddle River: Wharton School Publishing.

Dibella, A.J. and Nevis, E. (1998), How Organizations Learn, Jossey Bass, San Francisco, CA.

Estrin, J. (2009), Closing the innovation gap, Reigniting the spark of creativity in a global economy.

Gassman, O. (2006), “Opening up the innovation process: towards an agenda”, Research Policy.

Gopalakrishnan, S. & Damanpour, F. (1997), “A Review of Innovation Research in Economics, Sociology and Technology Management”, Omega, International Journal of Management Science, vol. 25, no. 1, pp. 15-28.

Kodama, F. (1992), “Technology fusion and the new R&D”, Harvard Business Review.

Luecke, Richard. Ralph Katz. (2003), “Managing Creativity and Innovation”, Boston, MA: Harvard Business School Press.

Miotti, L. and Sachwald, F. (2003), “Co-operative R&D: why and with whom? An integrated framework of analysis”, Research Policy.

Nambisan, S. (2003), “Information systems as a reference discipline for new product development”, MIS Quarterly, Vol. 27 No. 1, pp. 1-18.

Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating Company, Oxford University Press, New York, NY.

Read, A. “Determinants of successful organizational innovation: A review of current research”, Journal of Management Practice, 3(1), 95-119.

Rigby, D. and Zook, C. (2002), “Open market innovation”, Harvard Business Review, Vol. 26 No. 3, pp. 3-17.

Starbuck, W. (1992), “Learning by knowledge intensive firms”, Journal of Management Studies, 29, 713-714.

Szanto, B., (1996), “Science policy Vs. Technology Policy”, Technovation, 16(8), 411-420.

Tang, H. K. (1998), “An Integrative Model of Innovation in Organizations”, Technovation, vol. 18, no. 5, pp. 297-309.

Thomke, Stephan H. (2003), “Experimentation matters: Unlocking the new technologies for innovation”, Harvard Business School Press.

U.S. Congress, (1995), “Office of Technology Assessment, Innovation and Commercialization of Emerging Technologies”, Washington: Government Printing Office, pp. 16-17.

Van Krough, G., Ichijo, K., & Nonaka, I. (2000), “Enabling knowledge creation”, Oxford: Oxford University Press.

Wagle, D. (1998), “The cause for ERP systems”, The Mckinsey Quarterly, 9,130-138.

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