American Journal of Industrial and Business Management, 2012, 2, 160-165
http://dx.doi.org/10.4236/ajibm.2012.24021 Published Online October 2012 (http://www.SciRP.org/journal/ajibm)
Management Innovation in Brazilian Technology
Companies: The Challenges Faced by Managers in the
Practice of Innovation
Luan Carlos Santos Silva*, João Luiz Kovaleski, Silvia Gaia, Pedro Paulo de Andrade Júnior
Department of Production Engineering and Technology Transfer Research Group, Federal University of Technology—Paraná, Utfpr,
Brazil.
Received August 10th, 2012; revised September 7th, 2012; accepted October 7th, 2012
ABSTRACT
The overall objective of the study was to analyze th e process of innovation manag ement in technology companies in an
Informatics Nucleus in the State of Bahia, Brazil. The research was qualitative and by the point of view of its nature
was applied. It was also characterized as a descriptive research. In order to face challenges in the market, managers of
companies from Informatics Nucleus must continually innovate in their processes by acquiring new organizational
knowledge and showing an entrepreneurial an d innovative approach within the market, the execution an d maintenance.
Expansion of such actions has become fundamental to the further strengthening of technolog y companies in the State of
Bahia.
Keywords: Innovation Management; Technology Companies; Octagon Innovation
1. Introduction
This paper was developed in the Research Group on
Management of Technology Transfer, more specifically:
Agents of Innovation as a facilitator of the Technology
Transfer. This group is part of the Post Graduate Pro-
gram in Production Engineering from the Federal Tech-
nological University of Parana, and brings to discussion,
reflections on the understanding of innovation manage-
ment in informatics companies in many approaches
which do not take into consideration the specific region-
and market where they operate, as well as the direct rela
tionship in the process of innovation.
The overall objective of the study was to analyze the
process of innovation management in companies of In-
formation and Communication Technology (ICT) of the
Informatics Nucleus of Il héus in Bah ia State .
According to SINEC (Syndicate of Industries of Elec-
trical Devices, Electronics, Computers, Information and
Related Items from Ilhéus and Itabuna), the electro-elec-
tronics industry has currently been highlighted in Brazil.
As an example, the Informatics Nucleus from Ilhéus was
responsible, in 2008, for 20% of produced and sold desk-
tops in the country. This number was reduced to 15% in
2010, due to a series of problems faced by the companies
in the Nucleus [1].
The SINEC has represented companies in the region
since November 1998. It emerged with the aim to repre-
sent and fight for the interests of entrepreneurs who be-
lieve in the econo mic potential of this sector. Th roughou t
these years, it has been seeking to develop new proposals
for the Nucleus, as the improvement of physical infra-
structure and the increasing of skilled labor, which con-
tributes to the companies to be able to absorb th e work of
professionals in the region.
The Pole region also has the infrastructure from the
University of Santa Cruz State (UESC), which can be
planning and developing advanced technologies and ad-
vising on the proper protection of intellectual property
generated by the Center for Technological Innovation
UESC.
UESC has been busy on interaction with the produc-
tive environment, in order to strengthen the research ca-
pacity of the institution and technologic companies’ con-
tent. It started in 2006, through a program which main
objective was to get closer to companies in the Informat-
ics Nucleus from Ilhéus. Such program resulted in the
development of a series of applied research projects and
technological extension, with the raising of funds from
the Informatics Law, in order of one million dollars from
2007 to 2010, with emphasis on the creation of the
Laboratory of Polymers (LAPOS) and the Laboratory of
*Corresponding a uthor.

Management Innovation in Brazilian Technology Companies: The Challenges Faced by
Managers in the Practice of Innovation 161
Mechanical Testing and Strength of Materials (LER -NER).
Partnerships in the area of Information and Communi-
cation Technology (ICT) has generated a proposal to
establish the Technology Park in the South of Bahia,
involving a major coordination among public govern-
ment (state and local), academy and companies in the
Nucleus. This project is still in pr eparation.
2. Literature Review
2.1. Innovation
In the literature, “innovation” can refer to a result of an
innovative process or to the innov ative process itself [2].
However, to some authors the specific term “innovation”
is only used for the result of the innovation process, and
“innovation management”, for the management of
activities that attempt to control the innovation process
[3].
Innovations are often classified in terms of the achi-
eved technological level, which produces categories [4].
The term innovation, in particular, means news [5].
The innovative activity may be related to new products,
new services, new methods of production, opening of
new markets, new sources of supply, and new forms of
organization.
Innovation has been characterized as a process of
marketing for a new product developed in practice [6,7].
Johne [8] distinguishes three types of innovation: product
innovation, process innovation and market innovation.
Product innovation provides the most obvious way to
generate revenue. Pro cess innovation provides the means
for safeguarding and improving the quality saving costs.
Market innovation aims to improve the mix of target
markets inside the selected markets. Its purpose is to
identify new or improved markets and new potential or
better ways to serve the target markets.
The role of the effective use of market information is
emphasized particularly in the case of product and mar-
ket innovation, including the generation, internal diffu-
sion, and market information of companies [9-11].
Innovation is characterized by its uniqueness, and it
can be highly radical, radical, intermediate, incremental
innovation, or lower [12].
Highly radical innovation is a un ique product, original
or a system that will turn the existing ones into obsolete
ones. It is based on proprietary technology beyond the art.
Radical innovation is a new product or system with the
original state of the art, proprietary technology will sig-
nificantly expand the capacity of existing ones. Innova-
tion is an intermediate product with new technology it-
self; however it can be duplicated by others. It is a mix-
ture of standard and special features. Incremental innova-
tion refers to a significant ex pansion of the product char-
acteristics unique to the original adaptation. Minor inno-
vation relates to incremental improvement related to ex-
isting products. It is a standardized product and an appli-
cation of the current technology. It does not generate
patent or require research and development.
Innovation is also characterized by the question: for
whom is it new? [5]. This refers to the adaptation unit,
which can be examined in terms of novelty for the com-
pany, to the market and to the industry [5,13,14].
2.2. Innovation Management
The term innovation management involves the managing
of entire innovation process from initial idea generation
through product or process development/adaptation of
bringing to market or start. This includes both strategic
and operational issues [7,15]. At the gross level, accord-
ing to Ojasalo [16], a new product development process
can be divided into three phases: Idea generation, techni-
cal development and marketing.
The process of innovation refers to multifunctional ac-
tivities that create innovations throug h the departments of
the company. Strategic planning means planning for
technology projects, technology or expertise in order to
maintain a balanced portfolio of technologies or skills.
Organizational change is relevant in the context of inno-
vation, since it is often difficult to talk about innovation
without considering organizational change. Business de-
velopment is also relevant in the context of innovation
because innovation can either drive or be driven by the
development company.
A study based on innovative companies led research-
ers Scherer and Carlomagno [17] to create a tool called
the innovation Octagon, able to make a diagnosis of in-
novative potential, as management in innovative enter-
prises.
The tool is structured in eight dimensions, including
the main points to be managed to enhance innovative
productivity, beginning from the strategy to process of
transforming ideas into results [17].
The eight dimensions proposed by the authors refer to
the following aspects:
 Innovation strategy: How does the company articu late
the direction of innovation initiatives?
 Leadership for Innovation: How is the understanding
of leadership and the necessity and relevance of in-
novation? How do managers support the atmosphere
of innovation?
 Culture of Innovation: What does the top manage-
ment say and do in order to create an atmosphere
which provides innovation?
 Relationships for Innovation: How does the company
use partners, customers and competitors in the crea-

Management Innovation in Brazilian Technology Companies: The Challenges Faced by
Managers in the Practice of Innovation
162
tion and refinement of ideas?
 Structure for Innovation: Where is the innovation
activity located and how is it organized?
 People of Innovation: How is the support for innova-
tion, its incentives and recog nition?
 Process of Innovation: How are innovation opportu-
nities created, developed and evaluated?
 Funding for Innovation: How are innovation initia-
tives financed?
The following guidelines are also relevant for manag-
ers to structure their firms to innovate. First, the company
must have strong support of innovation as a way of life,
by its example, words and actions. Secondly, the com-
pany must remain close to their customers, partly in re-
sponse to their expressed needs, but mainly to figure out
what they want in the future, preferably before customers
get to know them. Thirdly, there must be an internal
procedure to keep all the innovation projects under re-
consideration-continuous, so that the work is done si-
multaneously on all fronts, but it remains cohesive and
compatible [18].
Fourth, an innovative culture usually involves a con-
siderable freedom of action, substantial resources for
education at all levels in the company on new technolo-
gies and the use of small teams of employees who have
many skills. Fifthly, to sustain an innovative cu lture, it is
important that employees who successfully innovate
should be notic ed a nd rewar ded.
Market orientation has a significant positive influence
on the success of new products and, consequently, and it is
a crucial element of innovat ion m anagem ent [19-21].
3. Methodology
The research was qualitativ e and the point of v iew by its
nature is applied. It was also characterized as a descrip-
tive research. At first, the research consisted of an analy-
sis of secondary sources such as bibliographic references
and researches from other sources. In the second stage,
the references analyzed in the theoretical framework
served as support for gathering information directly with
the object of study.
The research population consists of Information Tech-
nology Companies (ICT) of the Informatics Nucleus from
Ilhéus (Bahia). According to information by SUDIC, Su-
perintendent of Industrial and Commercial Development
of the Bahia State [21,22], currently the Nucleus has 49
companies. For the purpose of this study, 25 companies
were selected for the questionnaire, but only 13 of them
responded to the research (up to 27%).
The sample selection was random. The questionnaire
was applied from March to April 2012. The first contact
was made by telephone with the managers. After that, the
questionnaire was sent to them by e-mail.
This sample constituted by 13 companies was able to
give a general view on innovation management as the re-
searched Nucleus, according to SINEC, is respons ible for
the production of 20% of the total commercialized com-
puters in Brazil [1].
Peopl e with str ategic posit ions in informatic s compa-
nies were selected for the questionnaire. In each com-
pany the tool was applied with two managers, one ma-
nager of the production area and another from the
company’s planning, totalizing 26 surveyed managers.
The research instrument was a questionnaire with 24
questions [17]. The applied questionnaire consists of the
Octagon model of Innovation Management or Innovation
Assessment, addressing eight points in the process, such
as: Leadership, Strategy, Relationships, Culture, People,
Structure, Process and Funding.
The tool was analyzed using Likert scale, with a score
from 1 to 7 where 1 refers to a strongly disagree opinion
while 7 means that the person strongly agrees. The high-
er the score applied, the better the management of inno-
vation in the enterprise.
4. Results and Data Analysis
A research with the managers allowed observing with
greater efficiency and effectiveness the operation of the
environments regarding innovatio n management.
It is worth noting before the analysis that each point
analyzed in the octagon of innovation management had
three questions directed to its context, in a total of 24
questions.
The following figure (Figure 1) presents the consoli-
dated results about the eight points of the octagon of in-
novation in th e 13 companies.
Innovation Assessment
4.86
4.57
6.64
4.71
2.57
2.14
2.57
6.43
Culture
Strategy
leadership
Funding
Process
Structur
People
Relationship
Figure 1. Results of the octagon innovation in companies
from informatics nucleus.

Management Innovation in Brazilian Technology Companies: The Challenges Faced by
Managers in the Practice of Innovation 163
The most critical points in the Informatics Nucleus, re-
garding innovation management, were: Process with 2.14
points, followed by Structure and Funding with 2.57
points.
Taking into consideration the processes, companies
found barriers to use project management tools to drive
as well as to systematically evaluate the results of inno-
vation initiatives, making it hard to provide a framework
for generating and selecting ideas deficit.
In structure, they found difficulties to breakthrough
highly innova tive initiatives. They do not have a flexible
organizational structure, with many hierarchical levels
and little decentralization of decisions so initiatives and
innovation activities does not have a defined coordina-
tion in companies.
With regard to the Funding, most companies do not
have a specific budget for innovation projects. New ideas
are not evaluated according to performance measures
which take into account the risks and uncertainties, and
have difficulties to seek financial resources for innova-
tion in different sources, because they don’t have a capa-
ble team for such activity.
In addition, points related to the human factor had the
best scores, including : Relationsh ips with 6.64 points and
people with 6.63 points.
For such matter, the Nucleus companies use their cus-
tomer’s networks, suppliers and even competitors to
generate and refine new ideas. They get to know the re-
vealed and unrevealed needs of customers and non-cus-
tomers. They have a process for tracking new markets,
trends and technology. The need for innovation is under-
stood by all within the companies, as well. The knowl-
edge and tools they need to innovate are known by eve-
ryone within the organization and the team has a high
diversity of knowledge, values, and career interests.
The points Leadership, Strategy and Culture had been
scored between 4.5 to 5.0, which are considered good
scores in the process of innovation management.
Considering Leadership, companies have clarity about
the concept and importance of innovation. The perform-
ance of leaders is evaluated with specific metrics related
to their performance in the process of managing innova-
tion, dedicating time and attention to the monitoring of
technological innovation projects.
For the Culture factor, managers provide ti me, benefits
and incentives (financial and nonfinancial) for innovation.
In general, companies allow employees to take risks and
make mistakes in the search for new solutions, and use
communication mechanisms to foster innovation in the
enterprise.
Regarding to the Strategies, innovation initiatives are
aligned with the strategy of each company. They seek to
present a clear focus on growth through innovation and
themes development, objectives and targets set for inno-
vation.
Data show that the companies in the Informatics Nu-
cleus of Ilhéus have a team of highly skilled managers
and employees with knowledge about their technologies
and innovations, but when it comes to the practice related
to innovation, they have a deficient structure, as reported
in the research, process with 2.14 points, Funding and
Structure with 2.57, which are essential to the practice of
innovation in en terprises.
5. Conclusions
Informatics companies are not alien to oscillations that
are occurring in the current competitive scenario. How-
ever, managers have not given proper treatment for is-
sues related to specificities of the company and individu-
als to promote innovation.
It seems to be necessary that they create an appropri-
ated environment to organizational learning: flexible and
without rigid hierarchical structures. Knowledge of tech-
nologies and innovations is not only essential to this
process, but essential. Practice linked to knowledge is
probably the best bet for even greater success. Research
has shown that the practice of the processes related to
innovation is the factor preventing companies from in-
creasing their capacity of innovation.
Universities and Research Centers may be an excellen t
alternative for companies in the diffusion of innovation
to ensure the protection of knowledge generated and tech-
nology transference.
The Information Technology Act allowed greater struc-
turing of the Nucleus, as well as tax incentives provided
by law.
In order to achieve innovation in a consolidated way,
using the innovation octagon, managers should promote
a network which would include every employee and
value creativity and ideas. The following five sugges-
tions aim to be a guideline to improve inno vation:
 Turn reactive innovation into proactive one.
Instead of waiting for ideas, companies should provide
employees with specific themes to be developed. Themes
should reflect the most urgent, up-to-date and relevant
issues, such as: Waste red uction, delays, complains, qual-
ity and productivity improvement. Such procedure may
result in little ideas, but they will be much more useful
and important to the company’s results.
 Direct creativity in order to achieve innovation.
Focusing on challenges and most relevant opportuni-
ties will provide a better way of establishing target is-
sues. Highlighting such issues, directly connect to em-
ployees activities, will allow managers and workers to
spend time trying to take actions. Once more, such ap-
proach will result in little ideas, but they will be ideas

Management Innovation in Brazilian Technology Companies: The Challenges Faced by
Managers in the Practice of Innovation
164
which are related to the company’s needs and priorities.
 Motivate employees to innovate.
Let employees know which are the main challenges
that the company is facing and let them propose changes
in order to keep the company highly competitive and
profitable. Managers can explain the reasons for a chosen
theme and then expect for innovative ideas related to
such themes.
 Get employees prepared for innovation.
As any competence or ability, creativity can and
should be improved. Good will and enthusiasm are not
enough to overcome cultural barriers, old habits, and
deficiencies. Set a team and provide basic tools for inno-
vation and creative so lution of problems. Select and train
facilitators who also support the teams in the use of the
octagon innovation.
In short, companies should direct their team creativity
to well-defined challenges applying tools to overcome
barriers and to lead to innovation and new paths.
Companies have been searched for good strategic ac-
tions to generate innovation, but they still have a defi-
cient structure. They do not have an effective know-
ledge management, making it impossible, in many in-
stances, to take actions which would be best taken in
companies that work with its members and departments
involved in the organization.
However, there is not a unique model for innovation
management for all organizations, since each organiza-
tion has its own characteristics and a culture difference.
In order to face such challenges, companies in the Infor-
matics Nucleus must innovate their processes continually,
always acquiring new knowledge organization to have an
entrepreneurial and innovative approach focused on the
market. Implementation, maintenance and expansion of
these actions become central to the further strengthening
of such companies in the state of Bahia.
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