Definition of Innovation

Introduction

Nowadays, the whole world presents a state of economic globalization and regional economic integration so that the pulse of the world relates closely in together through economic. The globalization cannot only be an opportunity but also a challenge for enterprise. Each company should pay more attention to grasp the trends of world economic development and try to review its own advantages and disadvantages in the eye of the world. What is most important in the big tide of market competition is the innovation, which also the main topic towards the development of enterprises. Innovation is the soul and the inexhaustible driving force of the development for a country, while is the essential condition to look for a breakthrough for a company. In a sense, if a firm do not keep the step of innovation and forge ahead, it will be endangered. Fundamental significance of innovation is the courage to break through the enterprise’s own limitation so that can create more strategies to satisfy the needs of current market, walking in the forefront of the trend and finally to win the fierce market competition.

This article will discuss the question about what the innovation is and why it is so important in globally competitive environment firstly. In the next part of the essay, three challenges faced by enterprises during the process of innovation will be analyzed with its corresponding solutions, and also with some example analysis. Last but not the least, the significance of strategic approach to innovation.

Definition of Innovation

The concept of innovation was put forward by Schumpeter firstly in 1912, who was the ancestor of innovation theory. According to the point of him, the innovation is just setting up of a new production function and also a new combination with production elements and production conditions. Then again from the 1930s to 1940s, he gradually formed a unique theoretical system based on the innovation theory. Even though he did not have a research on individual innovation aspect, but his theory give an overall description of what innovation is and still lay a foundation of specific analysis research. Going down hid path, many scholars built new theories about innovation and make loads of innovation research from different angles, such as technology innovation theory, institutional innovation theory and management innovation theory.（Joseph， 1934）

First of all, technology innovation theory makes a deep research in terms of technology promotion, proliferation and metastasis based on the Schumpeter’s research. Mansfield, the professor in Yale University, thought that innovation was the practical use or the first time use of technology differing from invention or technology samples. （Edwin, 1986）He mainly analyzed the relationship between the small and medium-sized enterprises or the large firms and innovation,