DEVELOPING A CONCEPTUAL FRAMEWORK FOR INTEGRATING RISK MANAGEMENT 2014-08-29آ  developing a conceptual

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  • DEVELOPING A CONCEPTUAL FRAMEWORK FOR

    INTEGRATING RISK MANAGEMENT IN THE

    INNOVATION PROJECT

    By

    Alireza Khorakian

    A thesis submitted to the Stirling Management School

    in fulfilment of the requirement for the degree of

    DOCTOR OF PHILOSOPHY

    Stirling Management School

    University of Stirling

    March 2011

  • DEDICATION

    To my parents and my wife, Leila

  • iii

    Declaration

    This thesis is submitted in fulfilment of requirements for the degree of Doctor of

    Philosophy in Stirling Management School at the University of Stirling, Scotland, United

    Kingdom. I declare that this thesis is based on my own original work except for quotations

    and citations which I have duly acknowledged. I also declare that this thesis has not been

    previously or concurrently submitted, either in whole or in part, for any other qualification

    at the University of Stirling or other institutions. I am responsible for any errors and

    omissions present in the thesis.

    Signed

    Alireza Khorakian

    March 2011

  • iv

    Acknowledgment

    The completion of this study marks a milestone in my life, which would not have been

    possible without generous assistance from many individuals and organisations. My

    research owes something to all who have helped me. It would be impossible to express my

    thanks to all in depth.

    My chief debt of gratitude is to my supervisor Professor John Bowers, for his expert

    supervision, invaluable guidance, constructive criticism and his understanding and faith in

    me which made it possible for me to complete this thesis.

    I would like to extend my gratitude to the representatives of companies for donating their

    precious time and providing me with data for this study. In addition, I would like to single

    out for special thanks: Dr Gerry Edgar for his patience in listening and calm support

    throughout my study, Professor Kazem Oraee for his guidance, Ms Gill Mould for her

    kindness and encouragement and my good friend Caroline Dukelow-Stewart who

    generously took time out to read the drafts and the final proofs. I am also grateful to my

    PhD colleagues and Stirling University staff.

    I am indebted to my family for supporting me in many ways throughout my years of study.

    In particular, they have tolerated me when I was unable to fulfil my duties as a family

    member on many an occasion. I hope that I can make it up to them in the future. I want to

    express my everlasting debt to my parents for their unconditional love and unfailing

    support and providing me with the best situation to study. And I thank my sister and

    brother who believed in me all these years. My love and my thanks also goes to my parents

    and brothers in law for their constant and untiring support and encouragement.

  • v

    Last but not least to my wife Leila, who is my eternal sunshine, words alone cannot

    describe how thankful and blessed I am to have her love, understanding, support and

    patience in making this thesis come to fruition.

  • vi

    Abstract

    Increased competition, rapidly changing technology and customer expectations have

    caused the innovation process to become more complex and uncertain. This study

    examines the possible benefits of integrating some of the concepts of risk management into

    the innovation project. However, adopting rigorous risk management at every stage of the

    innovation process could be costly: some risk management could be valuable, but too

    much, or inappropriate risk management might stifle innovation.

    There are many separate models for innovation and risk management. This study develops

    a combined theoretical model which aims to help the understanding of appropriate risk

    management in innovation. The theoretical model is based on the classic innovation

    process but emphasises critical decision points and information needs at various stages,

    with various possible contributions from risk management. The stage-gate innovation

    process model, with its emphasis on decisions, provides a basis for incorporating risk

    management with decisions related to criteria and information needs; this stage-gate model

    was employed in the study as the core of a theoretical model combining innovation and

    risk management.

    The theoretical model was tested in a series of empirical case studies in the United

    Kingdom and Iran. These involved 40 detailed interviews in five medium-large companies

    from a variety of industries. The case studies suggest that the combined model of risk and

    innovation management should be relevant across diverse industries: staff from different

    countries (UK and Iran), industries and functional backgrounds could all relate to it and the

  • vii

    theoretical model provided a useful structure for developing a more detailed understanding

    of the possible roles and implementation of risk management in innovation.

    The study suggests that there is no simple guidance that companies can apply in all

    situations. The choice of risk management techniques varies with different innovation

    projects, the characteristics of the particular industry and the environment. In addition,

    different aspects of the risk management system are useful in different stages of the

    innovation project and attempting to apply a standard technique throughout the innovation

    project could lead to failure. A prime example is in the creativity stage: simple risk

    identification at this stage may be useful but more rigorous risk analysis may be stifle

    creativity. More rigorous risk analysis may be more appropriate in the later stages of the

    innovation process. Companies can use this theoretical model to help people appreciate the

    possible contribution of risk management at the different stages of the innovation project.

  • viii

    Table of Contents

    DECLARATION ............................................................................................................................................ III

    ACKNOWLEDGMENT .................................................................................................................................. IV

    ABSTRACT .................................................................................................................................................. VI

    LIST OF TABLES......................................................................................................................................... XIII

    LIST OF FIGURES ....................................................................................................................................... XIV

    CHAPTER 1 INTRODUCTION .................................................................................................................... 1

    1.1 BACKGROUND OF THE STUDY ...................................................................................................................... 1 1.2 INNOVATION MANAGEMENT ....................................................................................................................... 3 1.3 RISK MANAGEMENT .................................................................................................................................. 5 1.4 AIMS AND RESEARCH QUESTIONS OF THE RESEARCH ........................................................................................ 7 1.5 SCOPE OF THE RESEARCH ............................................................................................................................ 8 1.6 STRUCTURE OF THE THESIS .......................................................................................................................... 9 1.7 CONCLUSION ......................................................................................................................................... 10

    CHAPTER 2 INNOVATION MANAGEMENT............................................................................................. 12

    2.1 IMPORTANCE OF INNOVATION ................................................................................................................... 13 2.2 DEFINITION ............................................................................................................................................ 14 2.3 CLASSIFICATION OF INNOVATION ................................................................................................................ 17

    2.3.1 Product and process ................................................................................................................. 18 2.3.2 Incremental and radical............................................................................................................ 20 2.3.3 Manufacturing and service ....................................................................................................... 24 2.3.4 Firm size .................................................................................................................................... 25

    2.4 INNOVATION MANAGEMENT AND RISK ............................................................................................