The
Definition Of

Innovation

A grand strategy that seeks to reap the premium margins associated with creation and customer acceptance of a new or greatly improved product or service.

The initial commercialization of invention by producing and selling a new product, service, or process .

Innovation is the process of creating something new, which is central to the entrepreneurial process. According to the National Federation for Independent Business, small firms (fewer than 500 employees) are twice as innovative per employee as larger firms. In addition, small innovative firms produce 13 times more patents per employee than large patenting firms, and their patents are twice as likely as large firm patents to be among the 1 percent most cited (which is an indication of their influence).


Innovation producers (including private companies) will endeavor to develop new products (new goods or services) and new processes (new ways of producing those goods or services), with the goal (in a capitalist context) of enhancing market share and hence profitability. More generally, innovation simply refers to finding better ways to produce better goods and services.

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