Managing Innovation

Managing Innovation
Managing Innovation

Explain the five factors that influence the adoption and diffusion of an innovation

According to Karakaya, Hidalgo, & Nuur, (2014), the adoption and diffusion of innovation is impacted by the cultural, socioeconomic, legal and technological factors. Individual variables also come into play like the demographics, and psychological. The term diffusion from a marketers’ perspective refers to the possibility that the identified customer segment will be able to accept a new or modified product and service that is being delivered to them.

Contrariwise, the term adoption focuses on the rate that the customers will accept the product and service. The process of diffusion and adoption of innovation is dynamic as it alters from one product and service to another (p. 393).

There are five factors that influence the process of adoption and diffusion of innovation; they are relative advantage, compatibility, complexity, trialability and observability. Relative advantage refers to the degree to which an innovation is perceived to be better than a similar existing product or service by the users. The greater the level of perceived value, the higher the rate of adoption.

The relative advantage of a product can result from a lower price, accessibility and enhancement of the features of the product or services.  The 4P’s of marketing play an important part in the relative advantage when it comes to innovation adoption price, place, promotion, but most customers concentrate on the productive-based advantages (Oldenburg & Glanz, 2008, p. 314).

An example of relative advantage that has managed to penetrate different parts of the globe is the ATM teller machines that are slowly replacing the bank teller counters. The introduction of the ATM teller machines reduced the long queues in the banking halls in different places of the globe.

Compatibility of the innovation

The second aspect is the compatibility that focuses on how closely the product and service does relate to the past experiences, values, culture and the needs of the potential adopters. The greater the compatibility to factors that the customer can relate to the higher the rate of adoption and vice versa. Incessant and dynamic innovations have a higher compatibility level than the discontinuous innovations when it comes to the diffusion and adoption as more customers can relate with them (Robinson, 2009, p. 2).

A good example is the introduction of fast food restaurants in Asia and Africa took a longer period to record higher returns when compared to the Europeans. The reason being that most of the people grew up eating traditional foods and the culture in the two continents encouraged home cooked meals shared by the entire family.

The third factor is a complexity that focuses on the ease of comprehension, purchase and use of the product and service. When customers understand the importance of the innovation and ways to use it, the level of adoption increases than in areas where they need to acquire new skills and knowledge to operate it. In the adoption of innovation, the complexity of technology often does act as a hurdle to its diffusion.

The notion of complexity when it comes to technology is based on the age group, the youths are more tech savvy when compared to the older generations, hence have a higher adoption rate (Ballard, 2015).  A good example is the mobile phone industry, there are two models the complex one and the simpler one for texting, calling and sending SMS.

The fourth factor is trialability, which focuses on the rate at which the innovation is experimented with on a limited basis, increases its rate of diffusion. The notion of tried and tested in various products does appeal to the end customer and endear the innovation to them. Providing the customers with free samples, test-runs, and demos increases their confidence in the product, hence increasing the adoption rate. When it comes to electronic products the introduction of warranty and guaranty does increase the diffusion rate of the customers. An innovation that is trialable has minimal risk and has a high rate of diffusion among the customers (Karakaya et al., 2014, p. 395).

The final aspect is observability, the easier it is for people to see the result of the innovation the greater the likelihood for them to adopt it. Individuals are more attuned to accept things that they can see. It does reduce their rate of uncertainty instilling confidence in the innovation. New innovations that are likely to be diffused at a greater rate have the following properties in them they are tangible, social visible; benefits can easily be viewed within a short period of time. Observability does stimulate peer discussion, which in the end does propagate the diffusion of the innovation to target market (Robinson, 2009, p.2).

Question 4

What are the differences between organizational climate and culture?

Based on Schneider, Ehrhart, & Macey, (2013), organizational climate refers to the perceptions that are shared by the employees with respect to the practices, procedures and policies that guide their daily routines. On the other hand, organizational culture does refer to the shared orientations that glue the organization together based on beliefs, norms, values, and assumptions. They tend to shape the behaviour of the employees when they are working within their operations (p.381).

Secondly, organizational climate is centred on the micro image of the organization while organizational culture concerned with the macro vision of the organization. The macro aspect of culture is centred on the fact that the behaviour is ingrained in employees and is quite difficult to alter unlike organizational climate. Culture refers to the personality of the organization and does unite the members. The micro organizational aspect is centred on the way that the individuals within experience the culture of the organization and it does change quite frequently (Agafonovas & Alonderiene, 2013).

Thirdly, there are four types of organizational culture and climate. In organizational culture we have clan, market oriented, adhocracy and hierarchical culture while in the organizational climate, we have rule, goal, innovation, and people oriented.  Fourthly, the management and external forces on the other hand the organizational culture is rarely altered can easily alter organizational climate and it is influenced by all the employees within the organization (, 2014).

Organizational culture is more static as it takes a longer time for it to be altered while organizational climate is dynamic and changes more rapidly. Lastly, organizational climate can easily be measured unlike the organization culture that is more based on peoples’ behaviour and perceptions making it difficult to quantify. Organizational culture has its roots in the fields of sociology and anthropology while organizational climate focuses on the psychology sector. On the culture perspective, it does focus on stories, rituals, and physical artefacts while climate focuses on the factors that influence behaviour (, 2014).

Discuss five climate factors that influence innovation.

The five climate factors that influence innovations are risk-taking, freedom and autonomy, ideal time and support, challenge and involvement and trust and openness. Risk taking refers to engaging in activities that have a lot of uncertainties with respect to the expected outcome. Innovation and risk are synonymous in the organizational climate. Organizations that are risk takers have a higher chance of investing in progressive unlike risk averse organizations. Risk averse climate often does stall innovation and turns organizations into followers of organizations that have adopted the climate of risk (Bolton, Mehran, & Shapiro, 2011, p.456).

Risk is influenced by a number of factors that are conscious, affective and subconscious. The conscious factors are based on manageability, proximity, severity of the impact to the organization and the society. On the other hand, subconscious factors are heuristics in nature and involve availability, representatives, lure of choice et cetera. Lastly, affective factors focus on the intelligence, fatalism and optimism bias (Crenshaw & Yoder-Wise, 2013, p. 26).

The second aspect is freedom and autonomy, which does focus on the creating a climate that gives the employees in the organization the independence to come up with innovations. The employees have the creative freedom to exploit the resources that are within the organization to come up with new driven products and services. In the spirit of freedom, the management often does create policies that make the innovative process flexible as long as it is in line with the goals and objectives of the organization (Acemoglu, Akcigit, & Celik, 2014).

The third factor focuses on ideal time and support from the organization. An innovative climate often does begin from top management where the employees are given full control of the resources that they need to come up with creative products and services. The organizational structure is often decentralized, hence creating a seamless flow of communication, policies and procedures (Acemoglu et al., 2014).

On the time perspective, most of the procedures are integrated to ensure that there is an easy coordination within the organization that is channelled to facilitate the research and development department. The support also does come from external partners like suppliers, investors, and higher institutions of learning among others. The entrance of partners does provide the organization with financial and academic knowledge that plays an integral role in shaping the innovations that will lead to the creation of new products and services (Zennouche, Zhang, & Wang, 2014).

The fourth factor focuses on challenge and involvement, innovation process does face a large number of hurdles that arise from both the internal and external climate. The internal challenges often deal with limited finances that often do incapacitate the progress of innovation. Innovative climate does require a continuous flow of innovation to ensure that the employees in an organization can formulate products and services.

The second challenge is constant failures in the innovative process that does demoralize the employees in the creation of innovative products and services. Another perspective is that the challenges that individuals face can easily create an innovative climate. Challenges trigger human beings to think analytically in ways they can resolve them resulting in the creation of creative and innovative products (Zennouche et al., 2014). The laptops for example were created to enable human beings to deal with the portability challenges posed by the computers.

On the other hand, the involvement factor does focus on the interpersonal exchange between the employees in the organization. The employees work together to foster an amicable and creative climate that does foster innovation. The employees are willing to share their knowledge and skills in different departments to foster the creation of innovative products that will enhance the competitive advantage of the organization (Axelsson & Sardari, 2011, p. 31). 

A good example is the Apple Incorporation; the company has created a climate that enables the employees to willingly share their ideas, hence the increase in the number of innovative technological products coming from the organization.

The last aspect deals with trust and openness that refers to the environment where the employees know each other and have developed a deep relationship. A trust environment goes further to inspire the employees to willingly share their intellectual property with their fellow employees. Additionally, the environment enables the employees to formulate clear, distinctive strategies that are vital in chartering the innovative process (Henry, 2001, p. 35).

Moreover, it does enable the formulation of a common long-term goal that inspires the creation of innovative products and services within the organization. An open climate enables the members in the organization, especially top management to accept the failures that arise in the creation of innovative products and services. The acceptance encourages the employees to overcome their failures and create progressive products (Henry, 2001, p.35).


Acemoglu, D., Akcigit, U. and Celik, M.A. (2014). Young, restles and creative: Openness to disruption and creative innovations (No. w19894). National Bureau of Economic Research

Agafonovas, A. and Alonderiene, R., 2013. Value creation in innovations crowdsourcing: example of creative agencies.

Axelsson, P., and Sardari, N. (2011). A framework to assess organizational creative climate. Division of management of organizational Renewal and entrepreneurship.

Ballard, J. A. 2015. Decoding the workplace: 50 keys to understanding people in organizations. Santa Barbara, CA: Praeger.

Bolton, P., Mehran, H., and Shapiro, J. 2011. Executive compensation and risk taking. FRB of New York Staff Report, (456).

Crenshaw, J. T., and Yoder-Wise, P.S. 2013. Creating an Environment for innovation: <i> The Risk- Taking Leadership Competency<i>. Nurse Leader, 11(1), pp. 24-27. (2014). Difference Between Organizational Culture and Climate/ Organizational Culture vs. Climate. [Online] Available at:….between-organizational-culture-and-vs-climate/ [Accessed 11 August, 2017].

Henry, J., 2001. Creativity and perception in management. Sage.

Karakaya, E., Hidalago A. and Nuur, C., 2014. Diffusion of eco-innovations: A review. Renewable and Sustainable Energy Reviews 33, pp. 392-399

Oldenburg, B., and Glanz, K. 2008. Diffusion of innovation. Health behaviour and health education, 4, pp. 313-333.

 Robinson, L., (2009). Changeology. A summary of Diffusion of Innovations. Creative Commons Attrribution- Noncommercial. Australia.

Scheider, B., Erhart, M.G., and Macey, W. H. 2013. Organizational climate and culture. Annual review of psychology, 64, pp. 361-388.

Zennouche, M., Zhang, J., and Wang, B. (2014). Factors influencing innovation at individual, group and organisational levels: a content analysis. International Journal of Information System and Change Management, 7(1), pp.23-42.

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