PROCESS AND PRODUCT INNOVATIONS: A THEORETICAL APPROACH

Year 2010, Volume: 2 Issue: 2, 89 - 101, 01.12.2010

Yusuf Kurtoglu

Abstract

In this paper, first, we expressed the reasons how the firms decide and choice whether the process
or the product innovation investment that they supposed to attempt. Then, the economic
fundamentals of the firms’ decisions explained in developed models. Within this respect, the
capacity and the capability of the firms has taken into consideration as the major determining
factors of innovation targeted research and development (R&D) investment decisions. The human
capital source and existence of the knowledge management system accepted as the other
determining crucial factors. Besides, the organizational structure also required to adapt in R&D
processes accordingly to the type of innovative activity. Despite similarity of the inputs in model
equations, due to the differences in the extent of the innovative activities, the derived outputs
appeared quite different from each other. The outcomes of the each type of innovations reflects
the peculiarity of the R&D investments.

Keywords

Product and process innovations, tacit knowledge, spillover effect, knowledge management, organizational structure.

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