Schumpeter’s Theory of Innovation
The organizations in the innovation process can have both development and cooperation by the business leaders and team towards the manifestation of product innovation, process innovation, marketing innovation and organizational innovation to gain the competitive advantages. According to Schumpeter, innovation includes successful exploitation of new knowledge and also impact on management, economic activities and R&D to marketing with improved products. Innovation of products, process, market and organization context can be included through creative entities, technological changes that provide research and development opportunities for organizations to introduce innovation in gaining competitive edges. On the flip side, innovation strategies manage organization redesigning to provide value to employees and customers both and provide strategies essential for organizations to adapt the speed to drive business growth. The study develops knowledge on innovative initiatives by Burberry Plc based on UK fashion marketplaces and industries. Also, Burberry develops FY-2020/21 plans for customer experiences through digital innovation, revolutionizing fashion design, long-standing partnership with Twitter, transforming traditional marketing approaches to digital with the help of social media and mobile marketing.
There are also CSR activities by Burberry mentioned in the study to reduce environmental footprint, commitment to sustainability, enabling social progress and holding environmental and social benefits (Boddy, 2019). The recommendations on innovation must be developed to conceptualize brand new products, penetrate markets faster and also reinvent the business processes beyond efficiency and speed. Burberry Plc has also been involved in bringing innovations for corporate social responsibilities including sustainability, promoting renewables, Influencing suppliers, Balancing emissions and A Net-Zero future.
The impact of innovation in business growth can contribute to new products, innovative business processes along with developing fundamental changes in industrial structures.
The concept of business innovation follows Schumpeter’s theory of innovation to increase demand for products, reduce mistakes in production and manufacturing along with decreasing the overall cost. This effective innovation function can be operated by entrepreneurs following Schumpeter’s theory containing discovery, invention, innovation and diffusion.
Figure 1: Schumpeter’s theory of innovation
(Source: Malerba, and McKelvey 2020)
- Discovery stage in the innovation process can define the need for the change in organizations to be fulfilled by innovations.
- Inventions can have the importance of major innovation potentials, derivation of new concepts, market shifts and technological changes and mechanisms to introduce innovation.
- Innovation can have different processes including generating the ideas, implementing business effective strategies, gaining competitive advantages and introduction to new processes and products (Needle, and Burns, 2019).
- Lastly, the diffusion stage can allow the spread of the innovation process and communicate members of a social system in an organizational context.
Innovation can impact on organizational R&D activities and expenditures of generating innovation life cycle, technological improvements, and performance evaluation to gain competitive emerging opportunities in the chosen industry.
Figure 2: Innovation management in organizations
(Source: Needle, and Burns, 2019)
- Product innovation: according to Morrison (2020) this mainly refers to making the same products with improved components based on different industries. For example: in this stage products can become more relevant and user-friendly to place differentiations in the highly competitive marketplaces.
- Process innovation: process innovation can include changes in business process equipment, software, techniques to deliver the new type of product.
- Marketing innovation: it can refer to include new ways of appealing to the customers by the product. For instance, price changes, new packaging and value-based campaigns can be based on marketing innovation.
- Organizational innovation: this stage can include huge change to improve the business features, functions and performance of organizations. For example: external changes of organizations, better communications with stakeholders, customer satisfactions (Abalkhail, 2019).
One major benefit of innovation is intense growth and economic efficiency. The role of economy in innovation provides higher productivity, more goods and sales and boosting performances by the organization. On the other hand, Ceil (2018), innovation brings major financial developments in organizations to foster budgetary compliances, reduce unnecessary costs and build better products for organizational survival in the highly competitive marketplaces.
- Proactive approaches can manage first to the market bringing the change in products and services. For example: Apple, Dupont.
- Active approaches involve first mover advantages and have medium to lower risk exposure to defend existing technologies, Such as: British Airways, Microsoft.
- Reactive strategies are based on follower strategies that focus on operations, look for lower risks. For example: Southwest Airlines.
- Passive strategies mainly are follower advantage strategies to demand change until the customers demand for a change, such as: Tesla
It can be added that, there are different constraints such as lack of recognition, informal team information, poor handling of the team, budget and risks, tougher rules and regulations to innovate in the workplace. For reducing the barriers, organizations must comply with innovation that can help organizational goals in combining capabilities and existing resources.
In this study, the Burberry Corp has been chosen for defining different innovation activities and initiatives related to ESG related matters. The company has their popularity as a British fashion luxury house with a range of products such as footwear, fashion accessories, fragrances, leather goods and cosmetics. It has played key roles in driving change through the FY-2020/21. The company outlined three innovative initiatives such as creating a sustainable future by reducing environmental impacts, supporting communities and providing diversity and inclusion (burberryplc.com, 2022). The Five-year responsibility agenda 2017-2022 also targets positive change to support social empowerment in remote communities, driving change in the value chain, stimulating demand for sustainable raw resources, 100% of energy usage from renewable sources and tackling educational inequality.
Innovations adopted by Burberry Plc
There are different types of innovation brought by the chosen organization towards their goals, objectives and growths.
Figure 3: Revenue share of Burberry, 2021
(Source: statista.com, 2022)
- Engagements: Burberry Plc represents 115 nationalities across 33 countries to develop creative and effective drive of change. FY 2020/21 prioritize safety and wellbeing of employees by innovation in inclusive policies and maintain their wellbeing with additional paid leaves (Huang, and Kim 2020).
- Holistic approaches: Burberry world community intranet supports a variety of innovation in communication including calligraphy classes, DJ sessions, workouts and meditation during the time of upheaval.
- Employee recognitions in emergencies: bringing innovation in employee recognitions, the use of digital media and experiences introduces new values to the organization, virtual celebrations and providing reward ships in the time of Covid outbreak. It allows collective achievements on mental health wellbeing and physical safety in the organization.
- Career development opportunities: Burberry provides day to day executive development programs (EDP) for training their employees and aligning closely with career developments opportunities.
- Driving growth through inspired customer journeys: According to Olteanu (2020), Burberry redefines customer experience by leveraging digital technologies and strategizing creative ways to attract customers, building retentions based on their preferences as well bringing new opportunities with young low-income demographics in the UK.
Burberry especially promotes digital innovations bringing new opportunities for personalized experiences of customers. The brand had a major shift in business method from brick-and-mortar stores to digital stores available during the global crisis, Covid 19. Although the digital solutions provided different tech-driven solutions with the accessibilities of virtual appointments, live-chat, virtual events and celebrations, the company mostly gained competitive advantages by using augmented reality to allow customers to imagine fashion products around them (Chen et al. 2021).
Figure 4: Burberry’s global revenue from 2005-2021
(Source: statista.com, 2022)
The innovation in digitally focused business models by in-store digital experiences, mobile marketing and social media marketing opportunities. On the other hand, Antoniadis, Xanthakou, and Assimakopoulos (2019), the brand supports innovation initiatives called ‘mini programs’ to connect more with customers. Also, diversity and inclusion policies by the organization, disability functions and also supporting LGBTQ+ functions drive meaningful changes impacting 1 million people in 2021 (Alexandra, and Elena 2019). It can be added that the Community investment allocation dedicated 1.13% to revenue to charitable causes in 2021.
Ethics improves recruitment, encourages morals of employees, helps to retain current employees and gives the company a competitive advantage. According to Wilkes, Chapman and Mccall (2021), ethical theories are based on utilitarianism, deontological theory, and norm theory to maintain the rights of the general public as well as improve workplace atmosphere on integrity, quality, honesty and eliminating barriers in communication. Ethical leadership in organizations also removes unacceptable behaviors for both supervisors and team employees such as misrepresenting, cheating, lying or other mistakes in necessary business practices. Also, human resource managers maintain ‘do the right thing’ and train employees on what is considered to be right and wrong in the work culture. The impact of ethics in business also can outline integrity amongst employees and gain trust from the stakeholders such as consumers, investors.
- Ethical business practices have different benefits while impacting on organizational principles, beliefs and values.
- Ethical business can make better decisions and increase productivity of honesty and integrity.
- Ethical business also can keep unhealthy levels of competition between employees out of the workplace and treat them equally and fairly.
- Business ethics can generate trust and sustain good behaviors in a work friendly culture. Lastly business ethics can enhance customer loyalty providing competitive advantage through the company’s reputation.
Corporate social responsibility has the common practice of sustaining environmental goals and integrating socially to help the organization in controlling costs, attracting top quality talent, improving the brand recognition as well as facilitating financial success in the long-term. The role of corporate social responsibilities in modern business also can improve the concept of management with stakeholders, provide CSR activities improving business performances of the firm efficiently and effectively. CSR enhances organizational performance providing corporate reputation, financial performance enhancement, brand differentiation and employee commitments (Park, and Rhee 2021).
CSR initiatives and activities can provide a positive business atmosphere, increased sales and customer loyalty, organizational potential growth, easier access to the financial capital, social awareness, helping community members, better ability to attract and retain talents throughout the world.
Figure 5: The benefits of corporate social responsibilities in modern business
(Source: Chadha, and Ahuja 2020)
There are different ethical issues faced by modern business organizations such as harassment and discrimination in the workplace, social media rants and rumors, health and safety issues in the workplace, technology and privacy breaches as well as unethical accounting. In addition to this toxic workplace culture, unrealistic and conflicting goals of organizations can also create questionable processes with the unethical use of the company’s technology. On the flip side Chadha, and Ahuja (2020), discrimination and harassment for different cultures, religion can create bullying, gender inequality as well as discrimination against women based on their sex. Modern businesses are facing these ethical issues which can impact decreased productivity, conflicts amongst the members, resulting in business incurring higher costs and reduced profit margins. The impact of ethical issues also affects employee privacy, personal information breaches and infringement of company’s data such as annual Report, Revenue reports and other documents to the public.
- Good of innovations: Business ethics must focus on demonstrating the good of their new products, manage ethics through philanthropy and volunteer efforts which can benefit the society and building strong brand recognition amongst customers (Li et al 2021).
- The role of corporate leaders: corporate leaders must follow the right behaviors of the stakeholders, community, employees and customers to protect the reputation of the companies.
- Implementations of business policies: Also, business leaders must develop appropriate business policies to remove controversial objects in corporate governance such as discriminations, bribery, frauds and insider trading.
- Fulfilling vivid duties of the society: Modern organizations must fulfill their civic duty by applying ethical theories to benefit both the organization and the whole of the society towards welfare of healthy environment
Benefits of Innovation for Business Growth
Burberry PLC connects the past with their future creating sustainable luxury and transforming the industry. The brand offers conscious crafts towards a Net zero future by 2040 (Zazzara, Rapetti and Tyler 2020). The sustainability campaign also targets balanced emissions from the company’s regeneration fund and also provides development of the usage of 100% renewable electricity by 2022. United Nations SDGs has been promoted by luxury peers and sustainability projects with the ethics committee, external advisory committee and board and the CEO of the company. On the other hand, Nagaraj (2020), the company influences suppliers for achieving meaningful change in establishing fashion supply chains more sustainable. Also, the targets for GHG emissions can be reduced by 2030 by about 30% according to the FY 2020/2021.
In addition to this, the conscious crafted collections, recycled fibers used in manufacturing stages, production facilities with reduced carbon emissions can ensure positive change with minimizing waste, sustainable materials, sustainable packaging and caring for the supply chain.
Carroll’s corporate social responsibility pyramid has the four-part definition by offering a conceptual framework defining organizational legal, economic, ethical and philanthropic responsibilities.
Figure 6: Carroll’s pyramid of corporate social responsibility
(Source: Talonen et al. 2021)
- Legal responsibilities: Burberry PLC legally bounded to the environmentally sustainable processes while minimizing waste stages, restoring and repairing quality of their products, ensuring value to customers by sustainable packaging and certifications of FSC (burberryplc.com, 2022).
- Economic responsibilities: The Burberry’s treasury policy manages leadership in energy and environmental design certifications, pollution prevention and control with a minimum of 20% recycled and procurement that ensure an allocated proceedings worth one €93.6 million (Vinerean 2019).
- Philanthropy purposes: the ‘Five-year sustainability, offering volunteering services in local communities that the company donated over 14,000 items of business clothing for extra motivation to employees and boosting their Confidence.
- The recommendations can be based on innovation that the company can use the social media channels in better engaging consumers and ability bond’ as the part of the companies reports, diversity and inclusion promote service-based targets providing responsibility agendas. Human rights are also followed by implementation of UN protection, monitoring labor conditions across operations and establishing a global team of ethical trading with broader audits and responsibility programs.
- Ethical purposes: ethical business practices also manage different charitable spend by Burberry, training for employees, revitalizing the brand globally. Also, Burberry must bridge the gap between stores and digital channels by focusing on customer delight and provide them best in class customer experience.
- Another recommendation can be based on labor where the company must adopt ethical trading initiatives along with clear paying wages to their employees. The company must develop their ethical behaviors to increase employee retention rates, motivations by providing them incentives, compensations and other health benefits in terms of code of conduct.
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