An overview of classification of what would be transferred to farmers

As stated in previous paragraphs, the ambiguity of definitions in what would be transferred to farmers causes confusion and makes it difficult for people to understand them, as well as classifying the demand from farmers. Therefore, "a classification will help us to arrange and structure our knowledge in a way that is more fruitful and transferable that is simple list of description" (Coccia, 2006: 1). However, this is not an easy process due to the influence of several variables and different types of origin. For instance, in some recent books (in 2007 to 2012), scholars of the World Bank state that improved information, knowledge and technology, would be transferred to farmers while McKeown (2008) states that these transferable things relate to "change during the thought process for doing something", "useful application of new inventions or discoveries or new stuffs". However, these definitions are focused on the innovative function of what would be transferred, and the intensity of innovation would be a scalar in classifying these definitions, as suggested by Coccia (2006).

Before examining the classification with the scalar of innovation intensity, we need an overview of collection of definitions on innovation, as the transferable items are highly related to innovation, in some perspective, they are exactly like certain innovations. Thus, what do people refer to when talking about innovation? (see Figure 2.2)

Figure 2.2: Clarification of innovations from different angles of view Source. Own compilation.

Up to now, innovation has been discussed from the viewpoint of economics, philosophy, technological perspective, managerial perspective and in a broader context than just in traditional R&D. “Innovation is studied in many disciplines and has been defined from different perspectives” (Damanpour and Schneider, 2006: 216, quoted by Baregheh, 2009:

1324). Scholars have widened the application of “innovation” not only to products but also to things⁷, i.e. “innovation applies not only to new business and product ideas, but also to the internal working environment of a company". Recently, the World Bank has also updated the definition about innovation as "the process by which individuals or organisations master and implement the design and production of goods and services that are new to them, irrespective of whether they are new to their competitors, their country, or the world" (World Bank, 2006, quoted in WorldBank, 2012). However, OsloManual (1997) (paragraph 24, page 9) has stated innovation is the introduction of new goods or new quality of goods; alternatively an introduction of new methods of production; or an

7“Claus Weyrich wrote in Electronic News” is quoted by Small Business Encyclopedia

opening of a new market and dominated by a new branch. OsloManual (1997) also states that it is a conquest of a new source of supply or raw materials or a coming out of a new combination/organisation of an industry; and a long list of definition about innovation.

Box 2.6. An very old definition of innovation

Schumpeter had argued in his two books: The Theory of Economic Development (1934) and Capitalism, Socialism and Democracy (1942), in which he describes two different patterns on industrial innovation: the Schumpeter Mark I in the former book and the Schumpeter Mark II in the later ones.

Starting by his first studies around the 1930s on how the capitalist system could be affected by market innovation, Schumpeter derived a term “creative destruction”. The process of “creative destruction” is described in his book “Capitalism, Socialism and Democracy” as a process where

“the opening up of new markets, foreign or domestic, and the organizational development...

illustrate the same process of industrial mutation, that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one”. He means “innovation” is a process, by which a new thing will come and may result in a restructuring process, and also looking for the new thing is survival of entrepreneurship. In most of his literature, attention is paid much on entrepreneurial activities as main drivers of innovation. He assumed that an innovation (or innovations) is existed in cases of:

• An introduction of new good or new quality of a good, or

• An introduction of new method of production, or - An opening of a new market and dominated by a new branch, or

• A conquest of a new source of supply or raw materials, or

• A coming out of a new combination/organization of an industry.

By this clarification, the definition of innovation by Schumpeter deals with some important issue of innovation such as: innovation is a process, the context by that innovation appears, the importance of understanding of innovation among competitors, innovation and its impact on the process of economic restructuring, and conceptual issues of organizational innovation.

Furthermore, he tried to develop a theory where a company’s ability to innovate was mainly connected to its size. Initially, he stressed the better role of small and medium-size companies in conducting innovation due to their flexibility while large companies might get disadvantage in bureaucratic structures⁸. Later, he changed his idea by opposing the role of larger corporations in

8As understood as „the Schumpeter Mark I”

conducting innovation due to their strong power of abundant resources⁹ . He built up “a framework economic growth with emphasis on autonomous investment embodying new technical innovation as the basis of economic development, whereas in the Keynesian framework the emphasis is on management of demand" (Freeman, 1982, p. 2). These studies on innovation are typically connected with technological and economic context of this definition. He started a Schumpeterian school where different strands of analysis of innovation in industries are developed: (1) analysis of the relationship between market structure variables, i.e. firm size, industry concentration, entry and the level of innovation activity; and (2) pattern of innovation over the life cycle of industries; and (3) technological regime condition. Schumpeter has indicated terms of innovation basing on the available of factor “time”, that is incremental innovation, radical innovation. These terms are then developed by Schumpeterian's scholars.

• Incremental innovation: many small steps of minor improvement have been collected by times that are integrated in a final product. This type of innovation implies the collective actions of creators as well as creative work of them. Each new idea should base on old ideas and should originate from certain context. It doesn’t rely on creating something from nothing. Then finally, the final product would be completely different in compare with the predecessors.

• Radical innovation: In comparison with incremental innovation, radical innovation contains big steps of changes that create major improvements as a breakthrough.

• Revolutionary innovation: This degree of newness implies a huge, far-reaching impact to current situation. It contains many separate innovations, even more than incremental innovation or radical innovation, e.g. Green Revolution contains of many innovations in new crops' varieties, etc. that have improved the productivity of crops and growth of agricultural economies. In reality, these innovations often rely on each other. Incremental steps lead to radical innovations that, taken together, lead to revolutions.

The authors imply a huge variation in meaning relating to technological goods/services, progressive processes, or a way of arrangement that contain innovative actions, or managerial methods to improve the performance of an organisation which are changing continuously or discontinuously. However, all the scholars agree the two main common meanings of innovation, which are: The change of something that contains newness and their usefulness for certain customers. In other more concrete situations, those concepts are also considered under certain context and background, for example, under different

9As understood as „the Schumpeter Mark II”

perspectives of technical viewpoint, or theoretical review, or progressive issues, or a change in thought, etc.

Later on, the development of the concept of “national innovation system” was made, this places “innovation” in a broader context containing other methodologies of research. The term “National Innovation System” has been pointed for this set of institutions and flows of knowledge that “emphasises on the interplays between institutions, looking at interactive processes both in the creation of knowledge and in its diffusion and application” (OsloManual, 1997:6). By that way, innovation is not only set in vertical linkages or horizontal linkages but also in a network of multi-related linkages.

From the technological perspective

In 1997, the OsloManual, 2nd Edition, proposed by OECD, focused on two first Schumpeter categories¹⁰, in order to define the definition of innovation including technological product innovation and technological process innovation. These two first categories of innovation relate to technical issues rather than organisational innovation whose elements include new or improved organisational structures, management techniques or strategies. Two definitions were provided in the Manual, paragraph 24, page 9:

• “A technological product innovation is the implementation/commercialisation of a product with improved performance characteristics such as to deliver objectively new or improved services to the consumer”.

• “A technological process innovation is the implementation/adoption of new or significantly improved production or delivery methods. It may involve changes in equipment, human resources, working methods or a combination of these”.

Products here refer to both goods and services. Either new or improved products whose characteristics differ significantly from previous ones due to the use of new technologies/materials are technological product innovation. Meanwhile, a technological process innovation is defined by the adoption of new or improved production methods, including method of product delivery.

The Oslo manual also suggests that purely creative and aesthetic improvement should not be considered as innovation since the characteristics of commercialisation is not attached.

10As listed in the 5 types of innovations

“Innovation is a process that follows invention, being separated from invention in time.

Invention is the creative act, while innovation is the first or early employment of an idea by one organization or a set of organizations with similar goals” (Becker and Whisler, 1967:463; quoted by Baregheh, 2009:1329).

From the managerial perspectives

When referring to the role of innovation in economy or in sustainable development of an organisation, innovation is considered as “the basic driving force behind entrepreneurship and the creation of small business” (Small Business Encyclopedia). Baregheh (2009) have quoted from Zahra and Covin, 1994:183: “Innovation is widely considered as the life blood of corporate survival and growth”, or “Innovation represents the core renewal process in any organisation. Unless it changes what it offers the world and the way in which it creates and delivers those offerings it risks its survival and growth prospects” (Bessant et al., 2005:1366 quoted by Baregheh, 2009). It is assumed that innovation leading to increased productivity is the fundamental source of increasing wealth in an economy or: “Innovation is tightly coupled to change, as organisations use innovation as a tool in order to influence an environment or due to their changing environments (internal and external)”.

Alternatively, West and Anderson (1996) (quoted by Baregheh, 2009) stated “Innovation can be defined as the effective application of processes and products new in the organisation and designed to benefit it and its stakeholders”. Innovation literature while rich in typologies and descriptions of innovation dynamics is mostly technology focused.

Most research on innovation has been devoted to the process (technological) of innovation, or has otherwise taken a how to (innovate) approach (Arthur, 1988; McKelvey, 1993).

The context where innovations become important for entrepreneurship is based on the need of generating a stream of new products, systems, technologies, and services in order to create and sustain a source of competitive advantage. In some specific cases, “Innovation is the change of thinking to escape from stagnant situation and looking for a new development”. However, this opinion does not mean: “deep depression induces innovation” (Freeman, 1982:4), but in contrary, following to Freeman (1982), in many cases that “depression held back or limited the work”. Depression is not mentioned as an accelerator, “but rather war time demand and/or government pressure and policies”

(Freeman, 1982:4).

In other side, Sreenivas (2009) wrote in The Business Journal: “According to Weyrich, sustaining innovation in a business organisation requires an understanding of the company's core competencies, an innovative corporate culture, and a systematic approach”.

Therefore, a culture of innovation needs to be encouraged within a company: "If all the people able to extract value from a new product or technology are in the information loop, there is a smaller chance that opportunities will be squandered. Making use of the information resources available within a company allows employees to benefit from corporate memory. They are better able to focus on innovation because they know where others have been before them” (Ken’s statement, quoted by Sreenivas (2009)). In that way, the process of innovation includes three main phases (Wayrich, quoted by Sreenivas, 2009): "(1) the invention phase, in which ideas are generated; (2) the implementation phase, in which the best ideas are selected and developed further; and (3) the market penetration phase, in which ideas are exploited for commercial gain”.

Thus, these scholars define innovation from a different perspective which embraces different forms of innovation, including three types of innovation: innovation as a process, innovation as a discrete item including products, programs or services; and innovation as an attribute of organisations. By that clarification, definitions of innovation would be derived differently. Their characteristics, their performance as well as their policy-impact could be different. However, two main things will not changed: the newness of changes and its usefulness for certain customers.

From the other perspectives

The definition of innovation when considered by other perspectives is different. In the Marketing Dictionary: innovation defined more critically as: “Product, service, or idea that is perceived by consumers as new”. This definition focuses much more on the side of the customers rather than that of the (Meyers and Devebec, 1992). Even, OsloManual (1997) has defined innovation into other types by which different definitions of innovation are derived respectively: product innovation; process innovation; marketing innovation and organisational innovation.

• Product Innovation: This involves a good or service that is new or significantly improved. This includes significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other

functional characteristics. In the education sector, a product innovation can be a new or significantly improved curriculum, and new educational software.

• Process Innovation: Process innovation involves a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. In education, this can for example, be a new or significantly improved pedagogy.

• Marketing Innovation: Marketing innovation involves a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. In education, this can for example, be a new way of pricing the education service or a new admission strategy.

• Organisational Innovation: Organisational innovation involves introducing a new organisational method in the firm’s business practices, workplace organization or external relations. In education, this can for example, be a new way organisation of work between teachers, or organisational changes in the administrative area.

Regarding above definitions, we could see the general agreement on “the change of something that contains newness”, and its applicability for certain customers that implies the recognition of customers and newness originality of the innovation. For the first one, the change of something that contains newness, people usually ask the question: “How new is new”. This question reveals that customers always have their own measurement on the newness of an innovation. In other words, customers judge the newness of innovations.

Newness emerges when customers compare with other products or procedures or arrangements, normally these products/procedures/arrangements are in previous stages.

Therefore, newness contains time spans. Today a product/procedure/arrangement is new when you compare with its predecessors, but tomorrow it will become old in compare with the new ones. Economists tend to focus on the process itself, from the origination of an idea to its transformation into something useful, to its implementation; and on the system within which the process of innovation unfolds. Since innovation is also considered a major driver of the economy, especially when it leads to new-product categories or increasing productivity, the factors that lead to innovation are also considered critically.

Effort of summarizing these abundant definitions and deriving a classification

Recently, efforts in generating of a collection of “a representative pool of definitions of innovation, from the different disciplinary literature of economics, innovation and

entrepreneurship, business and management, and technology, science and engineering”

(Baregheh, 2009) have been observed. These efforts aimed at the requirements for clarification of defining innovation “beyond just the typical extremes of incremental and radical innovation” (proposed by Kahn et al., 2003:197 and quoted by Baregheh, 2009:1325). In spite of the fact that innovation is defined under different point of view, i.e.

economics, business and management, technology science and engineering and others will lead to different definitions, Baregheh (2009). tried to formulate a common understanding and agreement on innovation in all types. They have focused much on innovation within business organizations and environments. The assumption of “one common clarified definition of innovation will not only provide a better understanding of the notion of innovation for the diverse range of practitioners within organisations, but will also enable researchers to collaborate more closely to more holistically investigate this complex concept.”, Baregheh (2009) has also collected 60 definitions of innovation in order to identify a multi-disciplinary definition of innovation. However, the context where the definition of innovation originated from is not analysed clearly in their works. Moreover, these efforts have also a limitation when they do not consider the perspective where definition of innovation would be derived from. For instance, when people consider innovation as an activity, they may accept the definition proposed by WorldBank (2007), but when people consider innovation is an improved product or services, they might refer to the definition proposed by OsloManual (1997).

As well as Baregheh, Coccia (2005, 2006) tries to collect definitions of innovation in a classification, taking the background where the innovation is emerging, and the innovation intensity as a scalar. Coccia (2005, 2006) uses the approach called seismic as he measures and quantify innovation through an evaluation scale similar to that used in seismology by Mercalli. Starting from economics perspective, some of taxonomies for innovations presented in economic literature are synthesised in innovation degrees. As such, measuring the intensity of innovation might help to classify innovations into different 7 groups, in 7 levels of intensity: lightest, mild, moderate, intermediate, strong, very strong and revolutionary. The definitions of innovation are also re-arranged using key words. The intensity of innovation at the highest level, according to Coccia, will have highest impact on economy; and also is the target at which people are trying to reach.

In summary of this small part, innovation is becoming an important factor for economic development. Innovation maybe seen in many forms, from technical characteristics of an

improved good, service, or to be part of a whole process. Some innovations could be transferred to farmers such as improved seed, breed, techniques and management but some can only be supported by incentives such as building an innovative environment for innovation, enhancing the linkage with innovative forces. Innovation is different in comparing to invention because innovation contains operations after transferring, to continue the process of applying and diffusing, and invention relates very much to technological perspective while innovation could be seen in many other perspective. These conclusions are very important in defining the similarity of innovation in agriculture in empirical research.