Innovation can be interpreted as applying new ideas into the process of adding value to a product (OECD, 1991). The new idea can include the product or the production process. Based on these definitions, two important aspects of innovation are product innovation and process innovation. Product innovation is the application of new ideas in the form of qualitative changes to the product, while the innovation process is a new idea applied in the manufacture and delivery of goods and services. However, Schumpeter, 1997 states that there are three important elements in innovation, one other thing besides product innovation and process innovation is the organization’s conformity to the company. Schumpeter also added that innovation is opening new markets and forming new sources of raw materials.
In other words it can be said that innovation is a multidimensional process (as cited on (Smith, 2004).Novelty is another criterion of innovation. Innovation brings aspects of novelty into goods or services. This is what distinguishes between innovation and imitation. Innovation focuses on the application of new ideas into the process of adding value to goods or services, while imitation is a process of adopting existing techniques and designs. Innovation is also associated with invention and discovery. The fundamental thing that distinguishes it is the introduction of the product to the market.
Innovation opens opportunities in the process of introducing new goods to the market, so that both companies and consumers get benefit and knowledge of innovation. This is different from the concept of invention and discovery that not bringing new ideas or processes directly to the market. Process innovation is characterized as an innovation that called incremental innovation. This process requires ‘learning by doing’ and ‘learning by using’, that needs a consistent effort from actors and inter-linkages between them (Mehta, 2016). Any new ideas that apply to the production process and produce change will count as innovation. These changes will affect firms and consumers who then directly affect the commercial market. But in practice incremental innovation is very difficult to measure considering the changes as well as the addition of new ideas are often not visible.
Another criterion of innovation is the emergence of benefits besides of what are already expected or called a positive spillover. Spillover emerged from the application of new ideas on products and production processes are done as a form of innovation. There are three media intermediaries how knowledge becomes a positive spillover from multinational companies to local companies (Smeets, 2008). The first is a demonstration process conducted by multinational corporations that impact on imitation of products and production processes conducted by local companies. Another way of spillover is the mobility of workers that allows workers to get training from multinational companies and bring and apply their knowledge to local companies. The last one is through the upstream and downstream channels that bring the positive spillover of the company to the supplier and the consumer directly.
Measuring innovations in firm, industry and social levels is not easy to be done, the assessment process is complex and does not have a definite category to look at as a process (Groen, Wakkee, & De Weerd-Nederhof, 2008). Measuring Innovation presents current major indicators and new indicators of innovation. Major indicators contain R expenditure, patents, technology trade balance and high technology exports, while new indicators measure innovation trough surveying type of innovation, objects approach to innovation, and the result of innovation (Smith, 2004).
Another indicator is the density of scientists and engineers. “A first set of indicators focuses on the role education systems play in building competencies for innovation and on how this human capital is actually deployed on the labor market. These indicators position countries with respect to the performance of students from a young age and throughout the educational system, with a special focus on those with scientific skills, science and engineering degrees and doctoral holders, who are specifically trained for research” (OECD Organisation for Economic Co-operation and Development, 2010).This paper aims to compare innovation performance in India with China and Korea with Taiwan trough major indicators of innovation which are: R expenditure, patents, and density of scientist and engineers.