Innovation Management and Its Impact on Organizational Performance


Innovation management reflects organization’s readiness to face challenges and propose viable solutions to overcome those. However, unlike change management, innovation techniques are much more specialized and require a variety of transitions and shifts that should be initiated in an organization. In this respect, any reengineering processes should follow the changes in thinking process by providing a multidimensional view of how a specific change could enhance and improve organizational performance. Thus, supporting organizational change is indispensible for a company to sustain constant development and growth. However, reengineering process is an ongoing, long-term change implying modifications in various spheres of production and management. In addition, such a transformation can influence greatly the organizational performance by introducing a new way of thinking. Specifically, participation in decision-making should involve changing leadership and decision-making styles to avoid resistance and obtain commitment. Innovation management, therefore, touches upon restructure, reorganization and, therefore, it is quite challenging because of interferences that should be made to activate a new dimension of organizational work. In this paper, the focus will be made on the analysis of reengineering process, as well as how it influences effectiveness and efficiency of an organization. To define the changes and influences, it is purposeful to evaluate organizational performance and define how success is measured. In addition, the evaluation process directly relates to human capital involved into the metrics.

Main body

Innovation management is strongly associated with technological integration and restructure of the existing system for the purpose of advancing productivity and improving the quality of products and services. In this respect, Shaft et al. (2008) have provided their own research studies on the challenges that the firm can face while shifting from structured development environment to object-oriented development. According to the researchers (2008), “…object-oriented development (OD) has attracted the interest of information systems (IS) academics and practitioners because of the belief that OD makes it easier to develop and maintain software plus achieve software reuse” (Shaft et al., 2008, p. 276). In fact, such an approach is much more congruent with IS professionals’ cognitive processes, as well as the way they approach and classify various objects and events. At the same time, the actual transition from OD to SD approaches due to the fact that “…SD knowledge leads to a form of proactive interference” (Shaft et al., 2008, p. 277). In other words, in case IS developers plan to face transformation, they should be able to obtain new knowledge through removing the existing knowledge background. Therefore, total reconstruction of an organization impedes the previously existing systems, which creates a serious challenge to the training programs.

Organizational change often implies total reconstruction and integration of new patterns of thinking, as well as new theoretical paradigms. Organizational change, therefore, is an inherent component of innovation management. Schiuma et al. (2008) state that total restructure of various departments of an organization is often followed by the necessity to introduce core strategic resources that could support and enhance organizational change. In this respect, alternative constructs, including tangible and intangible assets, are important because the managers should be able to synthesize those in a manageable construct that would trigger further organizational performance. In addition, as Shaft et al (2008) refer to the importance of cognitive assets, Schiuma et al. (2008) pay specific attention to this factor as well. Specifically, the researchers emphasize, “identifying [Intellectual Capital] elements and understanding their effect on organizational change performance is often difficult, particular because IC may not directly impact them, but need to interact with a large set of organizational variable” (Schiuma et al., 2008, p. 162-163). Therefore, knowledge-based approach is insufficient for solving the problem of efficient transformation within an organization.

There are cases when organizational change and innovation management constitute the outcome of a broader context of transformations within an organization. This is of particular concern to the managerial changes. In this respect, Soliman (2011) argues that introducing transformation leadership style to an organization reflects the necessity to presents new approaches to managing knowledge and human resources effectively. As a result, the chosen course will definitely lead to successful innovation and reconstruction of a company. In fact, innovation management as a logical outcome of transformation can promote organizational performance and create wider perspectives for further development and growth. However, along with previously discussed research studies (Shiuma et al., 2008; Shaft et al, 2008), shift knowledge-based management should rely on presentation of new learning styles.

As it has been viewed from the research represented above, many studies have been dedicated to the influence of innovation management on organizational performance. However, little have been considered by positing performance management at the core of analysis. Indeed, performance management can become an important agent that will help to define the relationship between management innovation and organizational performance. According to Walker et al. (2011), management innovation is essential for promoting changing processes and fostering organization’s adjustment to the external environment, as well as increasing the effectiveness and efficiency of internal processes.

Apart from intellectual resources necessary for improving organizational performance, innovation management implies effective implementation and usage of information technology. The evident connection between innovation and information technology integration is reflected through improvements of organization’s competitiveness and growth. As a proof, Ismail and Mamat (2012) argue, “information technology provides an opportunity for business to improve their efficiency and effectiveness, and even to gain competitive advantage” (p. 268). To support the argument, the research introduces a number of cases revealing positive contributions made by integration of information technology to business organizations. Specifically, the firms recognize the influence of information technology on development of change management that is beneficial for facilitating customer relations, manufacturing, supply chain management, and procurement. Finally, information systems are indispensible for the innovation process itself. Although Ismail and Mamat (2012) have placed an emphasis on examining competitiveness of business firms, much research has been done exploring the role of innovating in change management and organizational performance. At this point, the authors state, “the adoption of information technology enhances a company’s response to customer demands with shorter delivery times” (Ismail & Mamat, 2012, p. 270). Thus, innovation management strategies are based on two essential components – intellectual capital and information technology.

Similar to Ismail and Mamat (2012), Shengbin and Bo (2011) also incline to think that information system is the key to successful organizational performance because it fosters innovation processes. Particularly, the researchers have put forward a hypothesis that “companies with a high level of technological capability will have greater innovation success…” (Shengbin and Bo, 2011, p 367). The fact that innovation success has a positive impact on organizational learning is undeniable, but specific emphasis should be placed on the actual driving forces leading to the improvements. To measure the organizational performance, Shengbin and Bo (2012) have chosen several components – technology selection, technology management capability, technological capability, and innovation success – that could be potential triggers of organizational performance.

Other evaluations of organizational performance are also revealed through measuring hypotheses and conducting a survey among the employees concerning their attitude to innovation and changes. For instance, Shaft et al. (2008) and Schiuma et al. (2008) have relied on quantitative methodology and statistics to figure out deviations and critical scores. Using such a method allowed them for addressing certain undercurrent components leading to increase in organizational performance. In particular, Shaft et al. (2008) have introduced a case study of a company to define how employees face the challenges of existing transformation of information systems, as well as how it affects their awareness of the necessity to obtain new knowledge. More importantly, organizational performance metrics has revealed that object-oriented development provides IS developers with better understanding of differences between software development concepts. Therefore, the results of the studies have proved that organizational performance depends largely on constant innovation and change.

Applying to a case study technique, Schiuma et al. (2008) have managed to introduce effective measurement of organizational performance. However, the analysis of organizational performance has been accomplished through collecting qualitative data to understand how various concepts and frameworks are interrelated. At this point, the analysis of existing concepts also provides a wider outlook on future development and improvement of organizational performance through the study of intellectual capital and its value for the company. Unlike Schiuma et al. (2008), Shengbin and Bo are more concerned with the verification of hypotheses to define how of the examined component influence organizational performance. The proposed schemes and tables illustrate the evident connection between the concepts under analysis.

The above-presented examples of organization performance metrics can differently be applied in various situations. For instance, in case it is necessary to analyze employees and consumers’ behaviors, specific emphasis should be placed on a qualitative analysis. In contrast, analysis of information technology integration can be carried out more effectively through the quantitative techniques. Nevertheless, there are no distinct patterns and paradigms that would identify which methods are used to define the influence of innovation management on organization’s performance. Despite the presented principles, the successful improvement of organizational performance must be premised on the readiness of the company’s staff to adapt quickly to the changing environments and provide the corresponding changes to the internal processes within an organization.


In conclusion, it should be stated, that reengineering of the process is a multidimensional phenomenon requiring significant transformations to various departments in the company. Nevertheless, the primary responsibility is imposed on the intellectual assets of a company. The point is that the company should be more concerned with training their human resources, as well as making their employees more flexible to innovations and changes occurred in the external environment. As soon as the thinking patterns have been changed, the company can take the course in improving organizational performance. In addition, thinking and cognitive processes are largely predetermined by such driving forces as technology selection, training programs, and choice of managerial strategies. All these aspects combined, the company can guarantee increase in organizational performance. Shifts in methods of knowledge acquisition are paramount for large business integrating the global market.


Ismail, A., & Mamat, M. (2012). The Relationship between Information Technology, Process Innovation and Organizational Performance. International Journal of Business & Social Science, 3(2), 268-274.

Schiuma, G., Lerro, A., & Sanitate, D. (2008). The Intellectual Capital Dimensions of Ducati’s Turnaround: Exploring Knowledge Assets Grounding a Change Management Program. International Journal of Innovation Management. 12(2), pp. 161-193.

Shaft, T. M., Albert, L. J., & Jasperson, J. (2008). Managing Change in an Information Systems Development Organizations: Understanding Developer Transitions from a Structured to an Object Oriented Development. Info Systems. 18, 275-297.

Shengbin, H., & Bo, Y. (2011). The Impact of Technology Selection on Innovation Success and Organizational Performance. I-Business, 3(4), 366-371.

Soliman, F. (2011). Could One Transformational Leader Convert the Organization From Knowledge Based Into Learning Organization, Then Into Innovation?. Journal Of Modern Accounting & Auditing, 7(12), 1352-1361

Walker, R. M., Damanpour, F., & Devece, C. A. (2011). Management Innovation and Organizational Performance: The Mediating Effect of Performance Management. Journal of Public Administration Research & Theory, 21(2), 367-386.