1.1 BACKGROUND OF THE STUDY
Production innovation is one of the important concepts in purchasing. Some evidence suggests that effective product innovation results to sustainable competitive advantage. Other observed new product development and it launching into the purchasing place as difficult costly took or a dangerous business. The question that needs to be answered re what is innovation why some firms embark on innovation? According to the universal English dictionary, innovation means something introduced, a change new tangled practice while develop is a state or process of developing growth evolution gradual process or expansion. Joseph Selumpete’s classic work on management of the innovation process type of innovative activity. They are invention, innovation and initiation. He defined invention is the act of execting or developing, a new product or process of idea while he saw innovation as the process of creating commercial product from invention. Finally, he defined initiation as adoption of the innovation by similar firms. How ever, initiation usually leads to product of process standardization.
Longman dictionary of English sees innovation a new idea, method or invention. But according to universal English dictionary innovation means something newly practice while development is a state or process of developing growth evolution gradual process or expensive. The technological revolution and greater competition is domestic and international market have increased the competitive importance of innovation. Recent research has show that firms invest more innovation. Infact positive or receptive investor attitude towards introduction of new products increase the price of the firms stock in the market place as well as at the stock exchange market. In view of the economy advantage of product innovation and need to stay a head of the curne, innovation in the face of their competitor in order to maintain sustainable success in future. Therefore, effectiveness of product innovations a subject, which is more recognized to be vital to the future of companies. This fact that may of the high avidity products is needed by customers are not readily available has led consumers into importing some of them. This problem can be solve if companies recognize the importance of innovation develop their innovative ability with government giving economic and instrument enabling environment when and when necessary.