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Related to innovation: invention
innovationsee RESEARCH AND DEVELOPMENT.
innovationthe practical refinement and development of an original INVENTION into a usable technique (process innovation) or product (product innovation). Innovation is an important means for a firm to improve its competitive position over rival suppliers by enhancing its PRODUCT DIFFERENTIATION advantages, and for improving MARKET PERFORMANCE (by, for example, lowering supply costs and enhancing product quality). Certain kinds of MARKET STRUCTURE may be more conducive to innovation insofar as they offer better incentives and resources for undertaking RESEARCH AND DEVELOPMENT (see MONOPOLY for further discussion). Innovation can be a lengthy and expensive process. For example, the original invention of the Xerox photocopying process was made in 1948, but it took a further 10 years of development work before the first commercial version of the product was put on the market.
In a more general way, innovation can contribute to faster ECONOMIC GROWTH.