FACTA UNIVERSITATIS Series: Economics and Organization Vol. 5, No 1, 2008, pp. 17 - 29

EXTERNAL AND INTERNAL FACTORS АFFЕCTING THE PRODUCT AND BUSINESS PROCESS INNOVATION UDC 001.895:658.62

Nebojša Zakić, Ana Jovanović, Milan Stamatović
Faculty of Entrepreneurial Business, Union University, Belgrade
Abstract. The competitive advantage of a company strongly depends on its possibility to benefit from innovational activities. Understanding the factors that affect product and process innovation and their effects is necessary for deciding on an innovation strategy that is one of the core factors of an innovation success. We research the influence of nine external and internal factors on product and business processes innovation. For the analysis of important relations and conclusions, beside theoretical literature, we use the results of several studies. Key Words: product innovations, business processes innovation, industry maturity, customer needs, demand, technological opportunity, investment attractiveness, company size, export orientation

INTRODUCTION Innovations are one of the main sources of a competitive advantage and they are essential for a company growth. Fast technology development, combined with the globalisation and fast changes in customer demand, implies that a competitive advantage of a company can be only temporary. Companies put great effort in beating the competition and improvement in the market game by introducing innovations. On the macro level, innovations have a vital influence on economic development of a country. Thus, it is not a surprise that innovations are more and more present in research, business and governmental circles both in developed and developing countries that wish to grow fast and become developed. Innovations differ among themselves. If we simply categorize companies as innovative or non-innovative, we risk to