A Proposal for a Standard With Innovation Management System

Oleg Golichenko and Svetlana Samovoleva
As the topic of innovation, risk is closely associated with innovation, which entails the pursuit of
perceived opportunities under conditions of uncertainty. In the study, the neo-Schumpeterian
approach has been chosen as a basis to consider such a phenomenon as innovation. According to
this approach, innovation is at the heart of economy driven by knowledge (Schumpeter 1934; Drucker
1974). It is considered as a result of interplay and integration of market opportunities with a firm’s
knowledge base and its capacity. In other words, the innovation is a market implementation of a new
idea. More precisely, “an innovation is an economic implementation of new, or significantly improved
product (good or service), or process, a new marketing method, or a new organizational method in
business practices, workplace organization or external relation” (OSLO Manual 2005, p.46).
According to OSLO Manual (2005, pp. 18), “innovation activities include all scientific, technological,
organisational, financial and commercial steps which actually lead, or are intended to lead, to the
implementation of innovations”. The innovation activity can also be divided into the following
processes: targets setting, action design, action implementation (innovation process), results analysis
and comparison with the targets. Innovation process, in its turn, consists of three overlapping
subprocesses. They are the production of knowledge; the transformation of knowledge into products,
systems, processes, and services; and their continuous matching to market needs and demands
(Pavitt 2006, p.86). The modern model of innovation process emphasizes feedback loops between
the subprocesses and highlights interaction with external factors (see, for example, Kline and
Rosenberg 1986).
A number of factors can hamper innovation activities. Some of them may slow such activities and
corresponding innovation processes or affect them negatively, e.g. such factors as high costs or lack
and uncertainty of demand, insufficient innovative potential, lack of skilled personnel or knowledge,
and legal factors, etc. These factors are associated with ones that provide the emergence of
increased risk of unsuccessful innovation activity, i.e. they are its risk factors. High risks create a
powerful disincentive for innovation activity. The risks arise to a large extent from a complex nature of
innovation activity, but part of the risks can be offset, and compensated for, by impacts of public policy
(Hilpert 1991, Edquist 2008, OECD 2009, European Union 2010) and the policy making by
enterprises themselves (Tushman and O’Reilly 1997, Berglund 2010). To mitigate and compensate
for risks, there is a need to find the bottlenecks in innovation processes and apply policy measures to
them. This affords an effective way to diminish the extent of uncertainty of risk management and
increase the perceptibility of risk by company management (MacCrimmon and Wehrung 1986, March
and Shapira 1987). As a result, the enterprise’s risk tolerance that affects risk taking in innovation
may be increased (Center for Tomorrow’s Company, 2009).
To be of assistance with the development of management and regulatory responses, the paper’s
approach leads to the construction of relevant problem spaces for innovation management and
regulation. But, the approach of the study has, contrary to the managerial one, a subjective nature. In
contrast to the standard approaches, the proposed procedure is targeted not to find the least
hazardous variant but the places of risk emergence, i.e. innovation activity risk factors.
The process of the identification and analysis of risk factors innovation activity, i.e. innovation
bottlenecks and obstacles, is organized as a five-stage procedure. At the first stage, the system of
innovation activity factors is determined. The second stage identifies the factors that have a negative
impact on innovation activity. During this stage, the surveys of enterprises are used. At the third
stage, the data of innovative survey is completed by additional information to obtain indirect estimates
of missing factors. To give information about the relative scope and magnitude of the factors, the
ranking (fourth) stage is introduced. Mapping is a subject-matter of the fifth stage.
2. The classification of factors of innovation activity
The separarion of the factor system takes place as a result of the first stage. The system is divided
into two subsystems (Figure 1). One of the subsystems includes factors that are directly related to
innovation activity. These factors determine the levels of the firm’s innovation capacity, technology
transfer and demand for innovative products. The other subsystem encompasses the events arising
from framework conditions of innovation activity. The latter is related to the impact of competition,
macro-economic conditions, business environment, financial and tax systems, investment
environment, international trade and investment, education etc. It is worth noting that such a factor as
legislation in many respects accounts for the effect of the most part of innovation activity factors. Each
of these subsystems factors is identified according to its impact on inputs and outputs of innovation
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