Farid Ahmad, Assistant Professor, IAT, BUET
Maeen Md. Khairul Akter, Managing Editor, Textile Focus
Introduction
Innovation is the next buzz world in the industrial and manufacturing sector all over the world. Every industry is in an indispensable race to do new things. New products, new features and characteristics, new methods and processes have become the instrument to draw ever changing customer demand. Textile industry is no difference in fact, innovative industries are becoming more successful and retaining more customers than the industries which are reluctant to embrace innovation. Everyday new designs are launching in the global apparel market; as a result there is no way but to adopt rigorous innovation in design and manufacturing in the apparel and textile industries. Productivity, resource management, quality management and environmental issues have also become undeniable factors in terms of innovation as doing business is becoming expensive day by day. As a results it is mandatory for industries to research, identify, adopt and control the appropriate product, process, technology and market to make business sustainable and profitable. Textile and apparel are the major industrial sector in Bangladesh. So future success of the country’s economy highly depends on the innovativeness of the textile and apparel industries. In this regard a research project has been going on at the Institute of Appropriate Technology, BUET to determine the innovative capacity of the textile industries of Bangladesh. A review of the research project is shared in this article to find the answer of the question “how innovative is our textile industry?”
Innovation and Innovative Capacity
Innovation is termed as the most effective mechanism for the technological and economic development of the developing countries. The capacity to innovate is termed as the innovative capacity of an industry. The more the innovative capacity the more the opportunities for business rise. Innovative capacity is a parameter used by economists to compare countries in terms of their capacity to innovate new technology.
At the national level the National innovative capacity is the potential of a country (both as a political and economic entity) to produce and commercialize a flow of innovative technology at a given point of time. As such, national innovative capacity depends on an interrelated set of fundamental investments, policies, and resource commitments that determine the extent and success of innovative effort in a country over the long term. (Porter & Stern, 2000) This national innovative capacity can be analyzed to determine a firm level capacity that is the industrial innovative capacity.
Industrial innovative capacity will lead to find the answer ‘why some firms are more innovative than others?’ Al though this is really a complex thing to understand or determine, still it clearly demonstrates a picture of the industries on their capacity for innovation. Theories of firms, literature on organization studies and the economic geography; all have a great influence in determining the innovative capacity of industries. (Hill & Neely, 2000)
The concept of the national innovation capacity is analyzed to determine the capacity to innovate at the firm level, which is the industrial innovative capacity. This is important to come to a conclusion about industrial organizations on why some firms or industries are more innovative than others? That is, what it takes for an industry to outplay other competitive industries in terms of innovation.
Every industrial organization is endowed with a set of resources, but to be innovative, management must enact the right organizational culture, develop and optimize the resources and capabilities constantly and harness links with external environment for new ideas. A similar definition of Industrial Innovative Capacity is given by a Cambridge Professor as followed.
‘Innovative capacity of a firm is its internal potential to generate new ideas, identify new market opportunities and implement marketable innovations by leveraging on existing resources and capabilities.’ (Hii & Neely, 2000) From the above discussion a conceptual model can be designed on what the generic factors that enables a firm to be more innovative.
Culture
Here, Culture corresponds to the extent to which a firm support innovations. This indicator can be measured by six items including strategy, leadership and support, company style, risk-taking, measurement systems and incentives systems. Another study can be stated where analyzing the influence of the innovation culture in innovation performance of products and processes in the textile industry has been done by researchers in Brazil. They proposed a model that provides an initial vision to improve understanding of the variables that influence the dimensions of innovation culture. The proposed model is divided into five determinants: strategy, structure, support mechanisms, behaviors that encourage innovation and communication. (Padilha & Gomes, 2016)
Resource
Resources relate to four categories, financial, intellectual, human and physical. The questions probed for the extent to which there is sufficient resources in place to support innovation initiatives. Financial resources’ endowments towards research and development, employee training and technological development are key indicators of innovativeness. Conceptualization of what the components of intellectual capital are can be attributed from the study done by Dr. Patricia where he reported a system of measuring and reporting knowledge based resources of any organizations. (Pablos, 2013) In his report he accumulated general literatures on intellectual resources and identified three sub-phenomena that constitutes the concept of intellectual capital.
Human Capital, relational capital and structural capital. According to (Bontis, 1998) human capital represents the individual knowledge stock of an organization as represented by its employees. It is accumulated value of investments in employee training, competence and future. (Skandia, 1996)
Relational capital represents the relationship with internal and external stakeholders, customers and strategic alliance partners. (Roos, Roos, Edvinsson, & Dragonetti, 1998)
The concept of structural capital refers to the value of what is left when the human capital – the employees- has gone home. Database, customer list, manuals, trademarks and organizational structures. (Skandia, 1996)
Dr. Patricia’s report identifies the following list of indicators for human capital and physical resource. (Pablos, 2013)
Human resource: Employee profile, staff turnover, education, commitment and motivation, results.
Physical/structural resource: Infrastructure, Customer support, administrative processes, innovation, quality improvement.
Competence
Competence relates to the range of capabilities within a firm that support innovation. This construct is measured by six items including new idea generation, project management, market knowledge, technical knowledge, experimentation and problem solving skills.
Networking
Networking is measured by six items representing customers, suppliers, competitors, importing know-how, knowledge institution and information search. This construct relates to the extent to which a firm makes use of networking for innovations.
Again, another study depicted innovative capacity or innovative behavior of firms to include a number of dimensions of a firm’s innovation process, namely product innovation, process innovation, market innovation and organizational innovation. (Roberts & Amit, 2003) Product innovation
Methodology of Research
The methodology of research in this study basically includes literature survey and industrial survey to accumulate the information required to meet the objective of the study. The objective is to determine the innovative capacity. The key factors that constitute the innovative capacity of industries are selected through extensive survey of the literature. The survey is based on a 1 to 3 point system so that the industries can be classified in to two classes as high innovative capacity and low innovative capacity industries. The reason behind classifying the industries are due to the fact that the obligations and constraints in terms of innovation are different in high innovative capacity and low innovative capacity industries. The scoring is done in a unified system where the benchmark is 1.00. The industries scoring closer to 1.00 are the most innovative industries. Scoring of four critical factors of innovative capacity is considered individually and in combination.
So the primary set of data is collected through the observation forms. Interviews and interactions in the industry and inputs from academic scholars have been taken in developing the concepts. The secondary source of data is taken from online sources, books, journals and relevant references for the literature survey. Fifty industries have been selected using the snowball sampling technique. Among them 41 industries provided the data for the research.
Statistical Representation of Research Data
The industries are represented in scatter diagram to depict their position in terms of the four critical factors of innovative capacity ie. Culture, resources, competencies and networks.
Conclusion
This research review is aimed at portraying an idea on how innovative is our textile industry. According to research the four critical factors and the sub-factors are analyzed and raw data was collected from 41 industries. As the last scatter diagram depicts we can see that most of the industries are still far away from scoring 1.00 which is the benchmark for innovativeness. The four critical factors combined, the areas the industries need to improve badly is their style of work, human and intellectual resources, project management and experimentation skills and networking skills. This is a qualitative research with an aim to depict the innovativeness of the textile sector in a statistical way so that we can imagine the position of our textile sector in terms of innovativeness. It also identifies the areas the industries need to concentrate and how. Without being innovative it will be really tough for the textile industries to survive in the near future. So this is the high time for the industries to think about the issue and take steps accordingly.
References
Acquaah, M. (2007). Managerial social capital, strategic orientation, and organizational performance in an emerging economy. Stretegic Management Journal, 28, 1235-1255.
Becattini, G. (1999). Flourishing small firms and the re-emergence of industrial districts. Proceedings of the 44th World Conference – Innovation and Economic Development: The Role of Entrepreneurship and SME, (p. 10). Italy.
Bontis, N. (1998). Intellectual Capital: an exploratory study that develops measures and models. Management Decisions, 36(2), 63-76.
Gilsing, V., Bekkers, R., Freitas, I., & Steen, M. (2011). Differences in technology transfer between science-nased and development based industries: Transfer mechanisms and barriers. Technovation, 31, 638-647.
Hii, J., & Neely, A. (2000). Innovative Capacity of Firms: on why some firms are more innovative than others? 7th International Annual EurOMA Conference. Ghent, Belgium.
Hill, J., & Neely, A. (2000). Innovative Capacity of Firms: on why some firms are more innovative than others? 7th International Annual EurOMA Conference. Ghent, Belgium.
Lumpkin, G., & Dess, G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135-172.
Pablos, D. P. (2013). Measuring and Reporting Knowledge Based Resources: The Intellectual Capital Report . Span: Department of Administracion de Empresas y Contabilibad, University of Oveido.
Padilha, C. K., & Gomes, G. (2016). Innovation culture and performance in innovation of products and processes:a study in companies of textile industry. Innovation and Management Review, 285-294.
Porter, M. E., & Stern, S. (2000). UNDERSTANDING THE DRIVERS OF NATIONAL INNOVATIVE CAPACITY. Massachhussets: MIT Sloan School of Management.
Roberts, P., & Amit, R. (2003). The dynamics of innovative activity and competitive advantage: The case of Australian retail banking. Organization Science, 14(2), 107-122.
Roos, G., Roos, J., Edvinsson, L., & Dragonetti, L. (1998). Intellectual capital- navigating in the new marketing landscape. NY: New York University Press.
Skandia. (1996). Intellectual Capital Report: Supplement of the annual report. Customer Value.
Stieglitz, N., & Heine, K. (2003). Innovations and the role of complementarities in a strategic theory of the firm. Strategic Management Journal, 28, 1-15.
