Innovation is the process involved in the making of improvements by introducing new ideas, or the act of introducing something new (The American Heritage Dictionary). It is "the process of translating new ideas into tangible actions with societal impact." (Krisztina Holly, Vice Provost, University of Southern California, and Executive Director of USC Stevens Institute for Innovation), or a creative idea that is realized. (Frans Johansson. Harvard Business School Press, 2004).
Innovation can also be seen as any new element introduced in a network, which has the ability to create a change, even if the change is momentary, and involves the costs of transactions between two or more actors, elements or nodes, in that network.
In business, economics, or government policy, innovation must be substantially different, and must have a significant amount of change. In economics, such innovation or change must increase producer value or customer value. Innovations are aimed at improvement, and the whole economy grows as a result of a succession of innovations. The term innovation may also refer to both incremental and radical changes to existing processes, products or services, and the goal of any innovative process is to find solutions to problems. Innovation is a vital topic in the area of economics, business, sociology, engineering and technology. Innovation is also considered to be a major driver of any economy, and so the factors, which lead to innovation to be implemented, are also considered to be crucial to policy making.
In an organizational context, innovation can be linked to growth and performance through improvements in, productivity, quality, efficiency, market share, and competitive positioning. Every organization has the capacity to be innovative, including organizations like universities, hospitals, and even local governments.
Although innovation adds value, it can also have negative or destructive effects on the economy, due to the fact that new developments might change or dispose of older or previous organisational practices. Organisations that fail to implement innovation in an effective manner may end up being destroyed by those that have better innovative tendencies.
Therefore, innovation typically involves a certain amount of risk. A key challenge in the process of innovation is the ability to maintain the right degree of balance between the process and product innovations, in a situation in which process innovations are likely to involve a business model that may lead to shareholder satisfaction through improved effectiveness, while the innovation of products develop customer support, but with a risk of some costly R&D that could damage shareholder returns.
Talk of industry innovation rarely brings the tourism industry to mind. Social and economic research focuses most of its attention on such innovation industries as the Pharmaceuticals, IT, Biotechnology, Instrument, and materials industries. Thus the occurrence of innovation with wide economic impacts (Dosi, 1982: OECD, 2000). In recent years the concept of innovation has been increasingly linked to the services sectors, mostly for the hospitality and tourism industry (Metcalfe et al., 1999), with projects