Inventions and Innovations: Does Stage of Development Matter in Assessments of Market Attractiveness?
Jones, Stephen C., Knotts, Tami L., Udell, Gerald G., Academy of Entrepreneurship Journal
The purpose of this study is to determine whether market attractiveness is affected by the product's developmental stage-specifically, invention vs. innovation. Two databases were combined for this study to assess prototype or market-ready products (innovations) and ideas submitted by inventors and manufacturers (inventions). On average, invention stage products were more attractive to evaluators than were innovation stage products; however, one critical factor - the ability to create a new venture from the product - was significantly higher for innovations. In addition, overall market readiness was on average more than 10 percent higher for innovation stage products than those at the invention stage. Stepwise regression results indicate that stage of development and new venture likelihood are more critical than other factors in deciding the market viability of a product.
Both invention and innovation are vital to a country's economic growth; however, their meaning and overall role in the innovation process differ. Invention is generally defined as the development of a new and useful product, while innovation refers to the ability to commercialize the invention based on a successful business model (Schoen, Mason, Kline, & Bunch, 2005; Attridge, 2007). Invention and innovation are important steps in new product development, but other steps exist in the innovation process which determine the type of invention created and the success of the innovation. A linear explanation suggests that basic research occurs first, leading to new knowledge or a better understanding of how something works. This knowledge is then applied to create an invention. Once the invention is produced or marketed, it becomes an innovation. Finally, when customers first use the product, this is known as acceptance or diffusion (Godin, 2005).
Conventional wisdom would suggest that as products progress through the innovation process they become more functionally sound and commercially viable. However, we are not aware of any research that test this belief using large databases of retail products at different stages of development - specifically, invention and innovation. Therefore, we compare which factors make products more attractive to the marketplace at these two stages. For this study, products in the invention stage were submitted by independent inventors to an evaluation firm for assessment regarding their feasibility. Products in the innovation stage were submitted by small manufacturing firms to Wal-Mart as part of a mass retailer screening program. Both groups of products were assessed using the same evaluation instrument. The remainder of the paper describes the concepts of invention, innovation, and market attractiveness in more detail, followed by a discussion of our methodology, results and conclusions.
INVENTION VS. INNOVATION
An early perspective on the relationship between invention and innovation was based on the views of Joseph Schumpeter. Schumpeter (1939) regarded inventions as simply "acts of intellectual creativity with little importance for economic analysis". Innovation, on the other hand, was seen as a key factor in the economy and considered to be independent of invention. Innovation could occur without invention (Godin, 2005).
Later views on invention and innovation presented the concepts as more connected and linear in nature. For example, Maclaurin (1953) identified a five step sequence focused on research, invention, innovation, financing, and acceptance. Unlike Schumpeter, he noted that when innovations occurred, they were the result of commercially introduced inventions. Redwood's (1987) "investment-innovation" cycle showed a similar sequential process. His model suggested that inventions led to patents and then product innovations, also known as saleable products. These innovations, once trademarked and branded, became commercialized products that eventually produced revenues for the firm. …