The Role of Innovation in Business

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The role of innovation in business


Innovation is defined in Schumpeter's Theory of Economic Development (1912) in the field of economics. In Schumpeter’s view, innovation is the process that introduces new combinations of production factors into the production system to get potential profits (Shelton, 2009). Schumpeter argued that innovation is composed of five aspects: the introduction of new products, generation of new technologies, exploration of new markets, acquirement of new materials, implementation new organizational forms (Shelton, 2009). As the famous statement of Ralph Waldo Emerson goes, “If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he
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In addition, Apple's stock value has achieved $ 550 billion and has already become the world's most valuable company (Amit, Zott & Pearson, 2012). Even so, growth of Apple's stock price can not keep up the speed of profit rate growth in the same period, which means that there is still room to soar (Markides, 1997). Besides, Apple has become the world's most innovative companies and won the champion of “Global Top 50 most innovative companies” of Business Week for six consecutive years (Cusumano, 2010). Apple's innovation is mainly focused on product innovation and business model innovation. Apple specializes in creating attractive products. Jobs repeatedly emphasized the company's products will be clean and simple. This design concept runs through the entire product line (Thomke & Feinberg, 2009). The clean and simple design of Apple’s products is owing to its technological innovation. For instance, iPhone applies over 200 technological patents such as multi-touch, gravity sensor, light sensor, three-axis gyroscope (Pontiskoski & Asakawa, 2009).

It can be clearly seen from this case that innovative strategy can make the company outstanding in competitive market. The way of nurturing, applying and implementing the imagination is highly creative in some companies which makes them turning into valuable companies in the market (Linden, Kraemer
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