Innovation and Efficiency

Innovation is a complex phenomenon that involves all spheres of technological, economic, and social activity, from research and development to investment, production, and application. In the management of innovation the relationship between innovation and efficiency is the key issue. In this report, therefore, we elaborate on a method for measuring efficiency in the innovation process. The core of our concept of efficiency is the link between the efficiency of the production unit that has adopted an innovation (dynamic efficiency) and the efficiency of the entire production field within which production units must act (average efficiency). The development of relative efficiency is connected to differences between basic, improvement-related, and pseudo innovations and to the decision-making environment for managers. Factors influencing innovative activities follow a continuum of efficacy ranging from inhibiting to strongly promoting innovative activities. Looking at the innovation process from the standpoint of the innovating system, we distinguish major determinants of performance and them compare the performance of industrial organizations through a profile showing these determinants in research and development, production, and marketing and in management at all stages