Innovative Activities in Modern Business

Evgeni Baratashvili  Irma Baratashvili  Leila Mamulashvili

Journal number 2 ∘ Evgeni Baratashvili ∘ Irma Baratashvili ∘ Leila Mamulashvili ∘
Innovative Activities in Modern Business

10.36172/EKONOMISTI.2021.XVII.02.E.Baratashvili.I.Baratashvili.L.Mamulashvili

Annotation. There is two understanding for the definition of innovation. In one case, Innovation is seen as the result of a creative process for new product (technics, technologies, methods etc); on the other case, as a newly made merchandise, elements, approaches and the process of introducing principles instead of existing ones. The main sign of innovation in the market economy is the novelty of its consumer properties. The concept of innovation extends to a new product or service, innovation in organizational, financial, scientific research and other fields, any perfection that ensures cost savings and creates the conditions for such savings.

Innovation arises from the use of scientific research and development results aimed at improving the process of industrial activity as well as legal and social relations in the fields of education, science and culture.

Keywords: Innovation, business, market economy, innovation process.

Introduction

In a market economy, the systematic methodology for describing innovation is based on international standards, according to which recommendations were adopted in Oslo in 1992. Hence the name - "Oslo leadership". They are designed for technological innovation and include new products and processes as well as their significant technological changes. Innovation is considered essential if it is introduced in the market or in the manufacturing process. Accordingly, two types of technological innovation are distinguished: commodity and process.

Commodity innovation includes the introduction of new products or their improvement. Procedural innovation - the acquisition of new products, or their significant improvement. In the US, 1/3 of all innovation belongs to the process, and 2/3 to goods, in Japan - vice versa.

Innovation is closely related to scientific and technical progress, it comprises of its results. A basic innovation is distinguished, which realizes the great inventions and becomes the basis for the formation of a new direction of technology. Improving innovations are usually the implementation of small and medium-sized inventions that are successful in the scientific-technical cycle of diffusion and sustainable development. Pseudo-innovation (or rationalized innovation), which is aimed at partially improving outdated generation of technics and technology, it as usual slows down the technological process (they either do not give effect to society, or have a negative effect).

The introduction of a new product is defined as a basic commodity innovation. Such innovation is aimed at acquiring a new generation of machines and materials and is based on fundamentally new technologies. An example of a basic innovation is the replace LED-based indicators with liquid crystal-based indicators, or the replace the steam engine with a combustion engine.

Improved innovations refer to an existing product whose qualities and value characteristics have been significantly improved by using more efficient components and materials, with partial modifications to technical sub-systems (in the case of complex products).

****

The innovation process approach refers to a complex process that involves the development, introduction, and commercialization of new consumer values — goods, equipment, technology, organizational forms, and so on.

The objective-utilitarian approach to innovation is characterized by 2 main points. First, the object is perceived as an innovation - a new consumer value, based on the achievements of science and technology. Second, the focus is on its utilitarian side - to meet the needs of society with great beneficial effects.

Motives for introducing innovation for innovative production are divided into internal and external. An internal stimulus for innovative activity is the replacement of obsolete weapons by the rise of competing products in the market. In the conditions of underdevelopment of market relations, especially during the economic crisis. Crucial incentives for innovation are external incentives driven by the economic policy of the State.

The transition of the world economy to a new stage of scientific and technical development has required innovative activities and new approaches that combine knowledge and technology of the market. It is the innovation that becomes the mythical "acting person" of the realization of modern scientific and technical revolutions.

Innovative products are the result of the introduction of productive innovations. This is a new or improved product. Solid innovative products are the result of the introduction of project innovation. It will include products made on the basis of advanced experience through the introduction of new or improved production methods.

Innovation Process is the process of transforming scientific knowledge into innovation, which can be considered as a sequence of events in which innovation matures from an idea to a specific product, technology or service and extends to practical application.

Unlike scientific and technical progress, the innovation process does not end with the introduction, i.e. with the first appearance of a new product on the market, or with the design power of a new technology. This process is not stopped even after the introduction, because with diffusion, the novelty experiences perfection, becomes more efficient, acquires previously unknown consumer properties. This opens up to a new space of usage and market and, consequently, to new requirements that perceive a given product, technology or service as a new to itself.

The basis of the innovative process is the creation and acquisition of new technology. Technology - is a combination of material factors of production, in which human skills and new knowledge materialize. Technology involves the integration of techniques, methods and means of production and the conversion of natural products into industrial and household products. The process of creating new technology begins with fundamental research aimed at acquiring new scientific knowledge and revealing essential regularities. The purpose of fundamental research is to open new connections between events, to understand the patterns of development of nature and society.

The second stage in the process of creating and mastering the technique is applied research aimed at applying previously discovered events and processes. Its main purpose is to solve technical problems, to clarify unclear theoretical issues, to obtain specific scientific results, which will be further used in constructive works on the scientific-technical line.

The innovation process includes a cycle, starting from the development of a scientific-technical idea to its realization on a commercial basis. The main bases of innovation is realized by entrepreneurial structures in the market economy as a means of solving commercial and industrial tasks.

Innovative activities are aimed at applying and commercializing the results of scientific research, improving the quality of the product (goods, services), improving and further introducing technology, effective sales in domestic and foreign markets. Innovative activity is related to capital investments in innovation, it is an innovative-investment activity.

Innovative activities involve a whole range of scientific, technological, organizational, financial and commercial activities. Innovative activities are based on the scientific-technical trinity, which is closely related to the creation, development, dissemination and application of scientific and technical knowledge in all fields of science and technology.

Its objects and subjects are selected in the implementation of innovative activities. Objects are the development of equipment and technology by production. Subjects of innovative activities are - legal entities and individuals, foreign organizations, citizens, as well as stateless persons participating in innovative activities.

Innovations can be divided into basic, improving and pseudo-induced innovations. There is a classification of innovation according to the depth of change provided by Valence:

• Zero-scale innovation - regenerate the primary features of the system, maintain and upgrade its existing functions.

• First-class innovation - changing the quantitative properties of the system.

• Second-tier innovation - regrouping system components to improve their functioning.

• Third tier innovation - adaptive change of production system elements in order to adapt to each other.

• Fourth Grade Innovation - A new option, the simplest qualitative change that comes out of the framework of simple adaptive changes. The initial signs of the system do not change - their useful properties are somewhat improved (for example, by increasing the existing electric motor system).

• Fifth Grade Innovation - New Generation. All or most of the properties of the system are changed.

• Sixth Grade Innovation - A new look, a qualitative change in the original properties of the system without any changes in functional principles.

• Seventh Grade Innovation - The highest change in the functional properties of the system.

Innovation allows us to adapt this or that type of strategy to the type of innovation, to construct organizational forms of management and economic mechanisms related to the type of innovation, to define the forms of realization and market progress that are not the same for different types of innovation.

There are many conditions and factors in any organization, the active use of which contributes to the development of innovative action. A fundamental role in the combination of factors of interest to us is played by the innovative culture of the organization, related to the implementation of all its innovative activities on the basis of the development of true values of society. Within the framework of innovative culture, the problems of internal integration and external adaptation of all structural subdivisions of the organization must be solved without losing a valuable development orientation. The behavior of the employees involved in the innovative action of the organization should be properly regulated.

The weakness of innovative culture and, moreover, its absence, based on the true values of the people, can be the main reason for the organization to work towards social goals in innovative ways that are unacceptable from a cultural point of view, which ultimately leads to its disruption.

It is desirable that the mission of the organization be based on cultural values, and its purpose and future be directed towards the bedrock of their preservation and multiplication.

Culture is an important precondition for the formation of an innovative climate in production, based on the traditions of the people, expressed in their aspiration for education, knowledge, development of non-standard thinking, use of natural, intuitive skills, as well as creativity and collective thinking. Notable are the qualities of people such as: patience with the environment and different worldviews, acceptance of new rules. Applying these traditions and human qualities in the innovative action of the organization ensures the rapid growth of the spiritual and intellectual capital of the organization, promotes the active growth of the number of innovations and enhances their competitiveness. At the same time, a new degree of innovative action of the organization is formed, where it dominates the social, spiritual material, which ensures the sustainability of its functioning.

The culture of an innovative organization should include a mission that reflects the existence of the organization, expresses the true values and principles of its functioning, corporate forms of interaction, its atmosphere, aligns with the strategy of achieving competitive advantage and high socio-economic efficiency through innovative technologies.

As it is known, in the course of society development, the forms of organization of labor and production are gradually changing, management structures are becoming more complex, small groups are strongly influenced by people, interpersonal relationships are strengthened, which often lead to conflict. It became necessary to move to an informal, organizational structure of management. Began to dominate the collective mind, acting on workers, increased the influence of leaders.

Small groups began to create their own subculture with an internal hierarchy with a set of rules and norms of behavior characteristic of non-standard, innovative-minded, informal behavior structures. Eventually, more naturally inclined to innovate, the informal organization began to have a stronger impact on staff than the formal one. Growing up on the basis of organizational culture (unwritten laws of conduct, social protection), the informal organization has taken precedence over the creative, innovative microclimate, and staff behavior regulation process.

As a result, in the given climate, an adequate management structure has started to be established, which supports:

• Staff inclination towards innovative thinking.

• Development of a sense of responsibility for each employee.

• Setting a clear collective goals.

• Clear formulation of specific tasks of the management team.

• Ensuring the conditions for successful implementation of the decisions made.

All the efforts of the organization are focused on creating a creative atmosphere of mutual trust, where employees feel free and motivated and ready to materialize their knowledge in intelligent products and innovative management technologies.

Creating such a high quality organizational structures are associated with great purposeful work, accepting and maintaining the core values of corporate culture. In particular, this is the case with corporate traditions based on shared human values, which express the cultural values of multinational peoples, helping each member of the team, raised in the cultural embrace of their own people, to realize their own unity with others. Jointly celebrate events that affect each member of the team, where an informal atmosphere is created to bring people together. As a result, internal organizational communications are enriched, as well as connections with the external environment are quickly and easily addressed by industrial and social issues. In short, an environment is created in the organization, promoting in all its manifestations, increasing mutual trust, creativity and development of the innovative actions.

Conclusion

Following in the footsteps of the intellectualization of labor underlying innovative action, the culture of the organization grows, which begins to transform qualitatively and develops under its influence. This tendency intensifies as the means and subjects of labor change, and so does labor itself. It becomes more complex, creative and intellectual. From the total number of staff engaged in innovative activities, the share of cultural workers who train in culture increases. Employee behavior becomes more ethical, built on the basis of cultural traditions. Innovative action is related to cultural, ethical norms, compliance with the rules of conduct, including the interaction of staff with others (clients, partners). Also, with colleagues and subordinates within the own organization.

References

Rick Mitchell, Keith Goffin. Innovation Management: Effective Strategy and Implementation. October 2016.
Joe Tidd, John Bessant. Strategic Innovation Management. (Wiley 1^st Edition), - September 2014.
Shlomo Maital, D.V.R. Seshadri. Innovation Management: Strategies, Concepts and Tools For Growth and Profit. 2007.
Tom Burns, G.M. Stalker. The Management of Innovation (Revised Edition), - Oxford University Press, 1994.
Paul Trott. Innovation Management and New Product Development (5^th Edition), - NY, 2014.
Allan Afuah, Innovation Management: Strategies, Implementation, and Profits. – NY, 2013
Jean-Philippe Deschamps, Beebe Nelson. Innovation Governance: How Top Management Organizes and Mobilizes for Innovation. March 2014.
Управление инновационными процессами: учебное пособие / В.В. Жариков. – Тамбов : Изд-во Тамб. Гос. Техн. Унта, 2009.
Фатхутдинов Р.А. инновационный менеджмент: Учебник. – М.: ЗАО <<бизнес – шк.>>, 2006.
Херберт Н. Инновационная деятельность на малых и средних предприятиях // Проблемы теории и практики. – 2005. - № 3.

EKONOMISTI The international scientific and analytical, reviewed, printing and electronic journal of Paata Gugushvili Institute of Economics of Ivane Javakhishvili Tbilisi State University

DOI: 10.36172/EKONOMISTI E ISSN 2346-8432 Print ISSN 1987-6890	Journal number 2 ∘ Evgeni Baratashvili ∘ Irma Baratashvili ∘ Leila Mamulashvili ∘ Innovative Activities in Modern Business 10.36172/EKONOMISTI.2021.XVII.02.E.Baratashvili.I.Baratashvili.L.Mamulashvili Annotation. There is two understanding for the definition of innovation. In one case, Innovation is seen as the result of a creative process for new product (technics, technologies, methods etc); on the other case, as a newly made merchandise, elements, approaches and the process of introducing principles instead of existing ones. The main sign of innovation in the market economy is the novelty of its consumer properties. The concept of innovation extends to a new product or service, innovation in organizational, financial, scientific research and other fields, any perfection that ensures cost savings and creates the conditions for such savings. Innovation arises from the use of scientific research and development results aimed at improving the process of industrial activity as well as legal and social relations in the fields of education, science and culture. Keywords: Innovation, business, market economy, innovation process. Introduction In a market economy, the systematic methodology for describing innovation is based on international standards, according to which recommendations were adopted in Oslo in 1992. Hence the name - "Oslo leadership". They are designed for technological innovation and include new products and processes as well as their significant technological changes. Innovation is considered essential if it is introduced in the market or in the manufacturing process. Accordingly, two types of technological innovation are distinguished: commodity and process. Commodity innovation includes the introduction of new products or their improvement. Procedural innovation - the acquisition of new products, or their significant improvement. In the US, 1/3 of all innovation belongs to the process, and 2/3 to goods, in Japan - vice versa. Innovation is closely related to scientific and technical progress, it comprises of its results. A basic innovation is distinguished, which realizes the great inventions and becomes the basis for the formation of a new direction of technology. Improving innovations are usually the implementation of small and medium-sized inventions that are successful in the scientific-technical cycle of diffusion and sustainable development. Pseudo-innovation (or rationalized innovation), which is aimed at partially improving outdated generation of technics and technology, it as usual slows down the technological process (they either do not give effect to society, or have a negative effect). The introduction of a new product is defined as a basic commodity innovation. Such innovation is aimed at acquiring a new generation of machines and materials and is based on fundamentally new technologies. An example of a basic innovation is the replace LED-based indicators with liquid crystal-based indicators, or the replace the steam engine with a combustion engine. Improved innovations refer to an existing product whose qualities and value characteristics have been significantly improved by using more efficient components and materials, with partial modifications to technical sub-systems (in the case of complex products). ** The innovation process approach refers to a complex process that involves the development, introduction, and commercialization of new consumer values — goods, equipment, technology, organizational forms, and so on. The objective-utilitarian approach to innovation is characterized by 2 main points. First, the object is perceived as an innovation - a new consumer value, based on the achievements of science and technology. Second, the focus is on its utilitarian side - to meet the needs of society with great beneficial effects. Motives for introducing innovation for innovative production are divided into internal and external. An internal stimulus for innovative activity is the replacement of obsolete weapons by the rise of competing products in the market. In the conditions of underdevelopment of market relations, especially during the economic crisis. Crucial incentives for innovation are external incentives driven by the economic policy of the State. The transition of the world economy to a new stage of scientific and technical development has required innovative activities and new approaches that combine knowledge and technology of the market. It is the innovation that becomes the mythical "acting person" of the realization of modern scientific and technical revolutions. Innovative products are the result of the introduction of productive innovations. This is a new or improved product. Solid innovative products are the result of the introduction of project innovation. It will include products made on the basis of advanced experience through the introduction of new or improved production methods. Innovation Process is the process of transforming scientific knowledge into innovation, which can be considered as a sequence of events in which innovation matures from an idea to a specific product, technology or service and extends to practical application. Unlike scientific and technical progress, the innovation process does not end with the introduction, i.e. with the first appearance of a new product on the market, or with the design power of a new technology. This process is not stopped even after the introduction, because with diffusion, the novelty experiences perfection, becomes more efficient, acquires previously unknown consumer properties. This opens up to a new space of usage and market and, consequently, to new requirements that perceive a given product, technology or service as a new to itself. The basis of the innovative process is the creation and acquisition of new technology. Technology - is a combination of material factors of production, in which human skills and new knowledge materialize. Technology involves the integration of techniques, methods and means of production and the conversion of natural products into industrial and household products. The process of creating new technology begins with fundamental research aimed at acquiring new scientific knowledge and revealing essential regularities. The purpose of fundamental research is to open new connections between events, to understand the patterns of development of nature and society. The second stage in the process of creating and mastering the technique is applied research aimed at applying previously discovered events and processes. Its main purpose is to solve technical problems, to clarify unclear theoretical issues, to obtain specific scientific results, which will be further used in constructive works on the scientific-technical line. The innovation process includes a cycle, starting from the development of a scientific-technical idea to its realization on a commercial basis. The main bases of innovation is realized by entrepreneurial structures in the market economy as a means of solving commercial and industrial tasks. Innovative activities are aimed at applying and commercializing the results of scientific research, improving the quality of the product (goods, services), improving and further introducing technology, effective sales in domestic and foreign markets. Innovative activity is related to capital investments in innovation, it is an innovative-investment activity. Innovative activities involve a whole range of scientific, technological, organizational, financial and commercial activities. Innovative activities are based on the scientific-technical trinity, which is closely related to the creation, development, dissemination and application of scientific and technical knowledge in all fields of science and technology. Its objects and subjects are selected in the implementation of innovative activities. Objects are the development of equipment and technology by production. Subjects of innovative activities are - legal entities and individuals, foreign organizations, citizens, as well as stateless persons participating in innovative activities. Innovations can be divided into basic, improving and pseudo-induced innovations. There is a classification of innovation according to the depth of change provided by Valence: • Zero-scale innovation - regenerate the primary features of the system, maintain and upgrade its existing functions. • First-class innovation - changing the quantitative properties of the system. • Second-tier innovation - regrouping system components to improve their functioning. • Third tier innovation - adaptive change of production system elements in order to adapt to each other. • Fourth Grade Innovation - A new option, the simplest qualitative change that comes out of the framework of simple adaptive changes. The initial signs of the system do not change - their useful properties are somewhat improved (for example, by increasing the existing electric motor system). • Fifth Grade Innovation - New Generation. All or most of the properties of the system are changed. • Sixth Grade Innovation - A new look, a qualitative change in the original properties of the system without any changes in functional principles. • Seventh Grade Innovation - The highest change in the functional properties of the system. Innovation allows us to adapt this or that type of strategy to the type of innovation, to construct organizational forms of management and economic mechanisms related to the type of innovation, to define the forms of realization and market progress that are not the same for different types of innovation. There are many conditions and factors in any organization, the active use of which contributes to the development of innovative action. A fundamental role in the combination of factors of interest to us is played by the innovative culture of the organization, related to the implementation of all its innovative activities on the basis of the development of true values of society. Within the framework of innovative culture, the problems of internal integration and external adaptation of all structural subdivisions of the organization must be solved without losing a valuable development orientation. The behavior of the employees involved in the innovative action of the organization should be properly regulated. The weakness of innovative culture and, moreover, its absence, based on the true values of the people, can be the main reason for the organization to work towards social goals in innovative ways that are unacceptable from a cultural point of view, which ultimately leads to its disruption. It is desirable that the mission of the organization be based on cultural values, and its purpose and future be directed towards the bedrock of their preservation and multiplication. Culture is an important precondition for the formation of an innovative climate in production, based on the traditions of the people, expressed in their aspiration for education, knowledge, development of non-standard thinking, use of natural, intuitive skills, as well as creativity and collective thinking. Notable are the qualities of people such as: patience with the environment and different worldviews, acceptance of new rules. Applying these traditions and human qualities in the innovative action of the organization ensures the rapid growth of the spiritual and intellectual capital of the organization, promotes the active growth of the number of innovations and enhances their competitiveness. At the same time, a new degree of innovative action of the organization is formed, where it dominates the social, spiritual material, which ensures the sustainability of its functioning. The culture of an innovative organization should include a mission that reflects the existence of the organization, expresses the true values and principles of its functioning, corporate forms of interaction, its atmosphere, aligns with the strategy of achieving competitive advantage and high socio-economic efficiency through innovative technologies. As it is known, in the course of society development, the forms of organization of labor and production are gradually changing, management structures are becoming more complex, small groups are strongly influenced by people, interpersonal relationships are strengthened, which often lead to conflict. It became necessary to move to an informal, organizational structure of management. Began to dominate the collective mind, acting on workers, increased the influence of leaders. Small groups began to create their own subculture with an internal hierarchy with a set of rules and norms of behavior characteristic of non-standard, innovative-minded, informal behavior structures. Eventually, more naturally inclined to innovate, the informal organization began to have a stronger impact on staff than the formal one. Growing up on the basis of organizational culture (unwritten laws of conduct, social protection), the informal organization has taken precedence over the creative, innovative microclimate, and staff behavior regulation process. As a result, in the given climate, an adequate management structure has started to be established, which supports: • Staff inclination towards innovative thinking. • Development of a sense of responsibility for each employee. • Setting a clear collective goals. • Clear formulation of specific tasks of the management team. • Ensuring the conditions for successful implementation of the decisions made. All the efforts of the organization are focused on creating a creative atmosphere of mutual trust, where employees feel free and motivated and ready to materialize their knowledge in intelligent products and innovative management technologies. Creating such a high quality organizational structures are associated with great purposeful work, accepting and maintaining the core values of corporate culture. In particular, this is the case with corporate traditions based on shared human values, which express the cultural values of multinational peoples, helping each member of the team, raised in the cultural embrace of their own people, to realize their own unity with others. Jointly celebrate events that affect each member of the team, where an informal atmosphere is created to bring people together. As a result, internal organizational communications are enriched, as well as connections with the external environment are quickly and easily addressed by industrial and social issues. In short, an environment is created in the organization, promoting in all its manifestations, increasing mutual trust, creativity and development of the innovative actions. Conclusion Following in the footsteps of the intellectualization of labor underlying innovative action, the culture of the organization grows, which begins to transform qualitatively and develops under its influence. This tendency intensifies as the means and subjects of labor change, and so does labor itself. It becomes more complex, creative and intellectual. From the total number of staff engaged in innovative activities, the share of cultural workers who train in culture increases. Employee behavior becomes more ethical, built on the basis of cultural traditions. Innovative action is related to cultural, ethical norms, compliance with the rules of conduct, including the interaction of staff with others (clients, partners). Also, with colleagues and subordinates within the own organization. References** Rick Mitchell, Keith Goffin. Innovation Management: Effective Strategy and Implementation. October 2016. Joe Tidd, John Bessant. Strategic Innovation Management. (Wiley 1^st Edition), - September 2014. Shlomo Maital, D.V.R. Seshadri. Innovation Management: Strategies, Concepts and Tools For Growth and Profit. 2007. Tom Burns, G.M. Stalker. The Management of Innovation (Revised Edition), - Oxford University Press, 1994. Paul Trott. Innovation Management and New Product Development (5^th Edition), - NY, 2014. Allan Afuah, Innovation Management: Strategies, Implementation, and Profits. – NY, 2013 Jean-Philippe Deschamps, Beebe Nelson. Innovation Governance: How Top Management Organizes and Mobilizes for Innovation. March 2014. Управление инновационными процессами: учебное пособие / В.В. Жариков. – Тамбов : Изд-во Тамб. Гос. Техн. Унта, 2009. Фатхутдинов Р.А. инновационный менеджмент: Учебник. – М.: ЗАО <<бизнес – шк.>>, 2006. Херберт Н. Инновационная деятельность на малых и средних предприятиях // Проблемы теории и практики. – 2005. - № 3.