08 Aug An innovative and rapidly changing project management environment is characterized by factors including faster delivery, flexibility, and increased productivity and unce

Title: IDentification of risk types innovation projects Authors: Walas- Trebacz Jolanta                        Bartusik Katarzyna Source:  International Journal of Contemporary Management Dec2023, Vol 59 Issue 4, p74-93. 20p ABSTRACT The purpose of the article is an attempt to fill a research gap in the field of issues re-lated to innovation projects and, in particular, to identify the types of risks associated with their implementation in organizations. Current identification and monitoring of the level of occurrence of various types of risk in in-novative projects is a key task for project managers in order to make effective decisions on how to eliminate or reduce them. The empirical verification is based on the methodology of our own research. The study developed and used a questionnaire for owners and managers imple-menting innovative projects. This research, and the results we obtained, make it possible to answer how innovation projects are treated in organizations, what the dynamics of the implementing various types of innovation projects in recent years has been, and the level at which various types of risk in in-novation projects have been assessed and identified. The literature review and research results show that the issue of risk in innovation projects is timely and important for many organizations, even more so for project managers looking for effective methods of identifying and managing it. Identifying the level of risk is crucial for the success of innovation projects because it reduces the negative impact of risk factors on a project's timeliness and budget, as well as its economic and technical-technological effects. The authors emphasize that it will be worth continuing the undertaken research and work towards identifying and evaluating all components of risk management sys-tems. Proper identification of risks in projects, and understanding their nature, is a kind of guar-antee of security for the organization implementing them. For the purpose of carrying out this empirical research, we adopted our own classification system of the types of risk associated with various innovation projects undertaken by organizations. Risk categories should be well-defined, corresponding to typical sources of risks for a type of innovation project in a given industry and the specificity of company's activity. The types of risk most frequently named by respondents across six types of projects were time, personnel and cost. [ABSTRACT FROM AUTHOR] Copyright of International Journal of Contemporary Management is the property of Sciendo and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) Author Affiliations: 1The Cracow University of Economics, Cracow, Poland Full Text Word Count: 12127 ISSN: 2449-8920 DOI: 10.2478/ijcm-2023-0013 Accession Number: 174407205 The purpose of the article is an attempt to fill a research gap in the field of issues re-lated to innovation projects and, in particular, to identify the types of risks associated with their implementation in organizations. Current identification and monitoring of the level of occurrence of various types of risk in in-novative projects is a key task for project managers in order to make effective decisions on how to eliminate or reduce them. The empirical verification is based on the methodology of our own research. The study developed and used a questionnaire for owners and managers imple-menting innovative projects. This research, and the results we obtained, make it possible to answer how innovation projects are treated in organizations, what the dynamics of the implementing various types of innovation projects in recent years has been, and the level at which various types of risk in in-novation projects have been assessed and identified. The literature review and research results show that the issue of risk in innovation projects is timely and important for many organizations, even more so for project managers looking for effective methods of identifying and managing it. Identifying the level of risk is crucial for the success of innovation projects because it reduces the negative impact of risk factors on a project's timeliness and budget, as well as its economic and technical-technological effects. The authors emphasize that it will be worth continuing the undertaken research and work towards identifying and evaluating all components of risk management sys-tems. Proper identification of risks in projects, and understanding their nature, is a kind of guar-antee of security for the organization implementing them. For the purpose of carrying out this empirical research, we adopted our own classification system of the types of risk associated with various innovation projects undertaken by organizations. Risk categories should be well-defined, corresponding to typical sources of risks for a type of innovation project in a given industry and the specificity of company's activity. The types of risk most frequently named by respondents across six types of projects were time, personnel and cost. Keywords: innovation project; project risk; types of risks; risks in innovation projects; identification of risk INTRODUCTION The new, complex and unique challenges of modern civilization create justifications for the implementation of innovative projects, thus giving them a practical dimension. Humanity is becoming an observer, as it were, of the synergy resulting from the power of technology, gigantic financial expenditures, efficient organization, and perfect cooperation, as well as the integration of systems and processes into ongoing projects. All this proves that "the impossible becomes possible", and "the limit is only imagination" ([81], p. 800). Innovation projects are of high importance, and occupy a special place in organizations ([23]). An innovative project can be defined as a set of measures aimed at achieving an economic effect through implementation of innovations, including commercialization of novel scientific and (or) technology-driven results ([74], p. 2). Innovation projects, as one of the crucial types of projects undertaken to add value in an organization, require large expenditures both before and during the implementation process. There are several key characteristics associated with innovation projects. One of them is their hard-to-define scope. The other is that the goal of the project is very often described at a very high level, with details that are hard or even impossible to define upfront at the planning phase ([118], p. 8). Those projects also frequently operate in a turbulent, dynamic environment with a high level of competition. Teams work under strict time pressure, which generates additional problems in the flow of communication, such as increased tension (Jacobs & Rodrigues, 2007). A company's success is determined by the results of its innovation projects ([119], p. 132). The danger of incurring a loss, or the possibility of not achieving the intended goal, is a risk of implementing an innovation ([107]). Innovation projects tend to be high-risk projects and their outcomes are uncertain. Thus, risk management of innovation projects seems to play a key role in their execution (Bowers & Khorakian, 2013; [21]; [134]; [106]). This article is an attempt to fill a research gap in the field of issues related to innovation projects and, in particular, to identify the types of risks associated with their implementation in organizations ([107]). Risk identification is an important step in the process of risk management, involving detecting and categorizing sources of risk ([134]; [106]; [97]). It is an iterative process, meaning that it is carried out repeatedly at each stage of a project's life cycle ([34]). Innovative projects carry the risk that the company will incur losses, such as additional costs in excess of the forecast; exceeding the planned implementation time of the project stages; losing time associated with the commercialization of the innovation in the market; or receiving income below what was expected ([46]). This article is structured in four sections. The first section explains the theoretical aspects of innovation projects, the risk involved, and the importance of the risk identification stage in projects. The second section shows our research methodology. The next section shows the results of the research. The article ends with the discussion and conclusion section, where the main study contributions, limitations, and suggestions for future studies are presented. THEORETICAL BACKGROUND   The concept of an innovation project and its classification Addressing the issue of innovation projects, the following question should be asked: what are innovations? Innovations are identified as something new—a change that might result in new products, technologies, non-standard services or management methods ([35]; [70]; [75]; [100], etc.). Innovations undertaken by organizations may concern several areas: research and experimental development; engineering, design and other creative work; marketing and brand equity; activities related to intellectual property; employee training; software development and database activities; and/or the acquisition or lease of tangible assets and innovation management (Oslo/Eurostat, 2018). It should also be emphasized that innovation is an interesting area of research that has been taken up by researchers from various scientific centers in recent years ([61]; [73]; [125]; [120]; [20]; [54]; [115], etc.). Taking into account the complexity and variability of the conditions in which modern enterprises operate, undertaking innovation-oriented activities, in particular innovation projects, should be regarded as an opportunity leading to increasing, or strengthening, competitive advantage in the market. Therefore, it is important to clarify the term "innovation project". An innovation project is a temporary endeavor with a separate organizational structure, implemented in accordance with an adopted plan of activities, based on allocated resources, and aimed at achieving specific business benefits through the effective commercialization of the innovation or its application within the organization ([82], p. 73). Innovation projects can be any activity of a novel nature or unprecedented approach, and they are distinguished by a higher degree of difficulty and increased chance of achieving the project's goals and products. They may be implemented according to a scope that is modified on an ongoing basis ([58], p. 187). Innovation projects are defined as a set of activities that are organized and managed for a specific purpose and with their own objectives, resources and expected outcomes (Oslo/Eurostat, 2018). Innovation projects are marked by unprecedented approaches, a higher degree of difficulty, and an increased risk of not achieving the project's goal and products, which may be implemented with an unspecified scope ([47], p. 1695). According to M. Wirkus, an innovation venture (project) should be distinguishable from other types of ventures primarily by the element of novelty, the hallmarks of which should appear in the end result of the venture (2006, p. 18). Taking into account the characteristics of projects, it can be said that an innovation project is a kind of process that is characterized by complexity, limited in both time and resources, and that leads to the achievement of a specific objective. The purpose of an innovation project can be the implementation of new or significantly improved products, processes or methods in a particular organization, and is often considered to be an opportunity to use knowledge to solve practical business problems within a company. According to A. Sulejewicz, the proper use of knowledge significantly reduces uncertainty in doing business (2006, p. 12). In an attempt to classify innovation projects, the following types can be distinguished: technological/technical projects, research projects, and product development projects ([40], p. 618-621). S.C. Wheelwright and K.B. Clark (1992) divided innovation projects into four types: research and development, radical, platform and derivative ([40], p. 621). Two of the four types of project defined by A. [87], organizational and developmental, by their scope refer to innovation. On the other hand, J. [70] categorizes all innovation projects under one term – "research and development projects". Depending on their scope, he divides them into soft projects (usually concerning an invention, concept or theory) and hard projects (introduction of a finished product or service to the market). In the Oslo Manual (Oslo/Eurostat, 2018), innovation projects are categorized by the target of the change: product, process, marketing or organizational. [57] distinguish three types of innovative project: incremental innovation, evolutionary innovation, and revolutionary (radical) innovation ([67], p. 500). The above literature review shows the lack of clarity in the definition of the concept of an "innovation project". This variation is a consequence of the existence of different types of innovation projects in organizations, varying in size, originality, scope, and their need for management. Innovation projects have multiple overlapping qualities and fall into multiple classification categories. For example, a project concerning a new product may be simultaneously categorized as all of the following: an R&D project, a strategic project, a large (complex) projects, a project implemented independently or jointly with other entities, and an original project. Table 1 shows the general classifications of innovation projects, and their usual outcomes based on various criteria and examples in the indicated literature. Table 1. General classification of innovation projects   Classification criterion Types of innovation projects Results/Outcomes/Examples 1. Project orientation in the area Product innovation The introduction of a new or improved product to the market. This term refers to the novelty and modernity of the manufactured product, which may be created using new designs or raw materials, a new prototype, an enhanced technical specification, or state-of-the-art built-in software. Process innovation The introduction of new ways and methods of production, which may concern advances in strict technology or in production technology (e.g. infrastructure, informatic systems, or production). Organizational innovation The results of innovation projects within an organization are new solutions introduced to increase the efficiency of operations, such as new management methods – for example, just-in-time (JIT) implementation, quality control, business models, implementation methods, organizational structure, or a new salary system. Marketing The results of innovation projects within marketing include marketing strategy, packaging design, ad design, website projects, joint advertising projects, implementation of new methods or concepts, and marketing information systems, such as project customer relationship management (CRM). 2. The originality of changes Creative (original, inventive, rudimentary, pioneering) Creative innovations refer to inventions and discoveries that are independent creations of an individual or group, such as the design of a new product, a new technology project, or a new business model. They are equated (associated) with conquering terra incognito (the land of the unknown), paving the main paths of technical civilization and pressing into the gaps of development, i.e. mastering undiscovered fields. Secondary (imitating, modifying, adaptive, reproductive, imitative) Secondary innovations are "borrowed" innovations, already in use elsewhere. Their methods are reproducible and involve imitation of pre-existing precedents in order to achieve certain benefits (e.g., product or IT system design improvements). 3. Extent of the effects caused Strategic innovation Strategic innovation refers to innovative ventures of a longer-term nature that serve to achieve the strategic goals of the business entity (e.g., radical changes in management, entering a new market, a company merger project, crisis exit strategy projects, diligent business planning, etc.). Tactical or operational innovation These refer to ongoing changes in products, production technology and work organization, allowing for increased management efficiency in a short period of time (e.g., in a budgeted project, a new website design, etc). 4. The degree of product change and the degree of manufacturing process change (types of product development projects) Research or advanced development projects These projects aim at inventing new science or capturing new know-how for the organization. These projects are precursors to commercial development projects. Breakthrough development projects These projects create the first generation of an entirely new product and involve significant changes compared to previous products and processes. These projects are likely to create a whole new product family for the organization. Platform or next generation development projects These projects provide a basis for a product and process family, and thus establish the basic architecture for derivative follow-up projects. Derivative development projects These projects refine and improve select performance dimensions, creating, for example, lower-cost versions of existing products and processes. 5. The level of technological uncertainty at the time of the project's initiation Low-tech projects These projects are those projects that rely on existing and well-established base technologies to which all industry players have equal access. Although such projects may be very large in scale, no new technology is employed at any stage. There is little or no technological uncertainty prior to the project's initiation. Most projects in the construction and road-building industries belong to this category. Medium-tech projects These projects rest mainly on existing base technologies, but incorporate some new technology or feature. Such projects are characterized by a relatively low level of technological uncertainty. The new technology or feature is what usually provides the source of the project's advantage, thus serving as its key technology. Examples include many industrial projects of incremental innovation, as well as improvements and modifications of existing products. High-tech projects These projects are defined as projects in which most of the technologies employed are new, but already in existence, having been developed prior to the project's initiation. Integrating several new technologies for the first time leads to a high level of technological uncertainty. Many, though not all, projects in the tech industry or the defense industry would normally be characterized as incorporating radically new technologies, thus making these industries the natural home for such projects. Super High-Tech projects These projects are based primarily on new, not entirely existent technologies. Some of these technologies are emerging; others are even unknown at the time of the project's initiation. 6. Reason for undertaking projects Demand-driven (ordered, initiated by the market) Demand-driven innovation is driven by market and non-market needs. An innovation project, in this case, is a response to an existing demand (a new packaging design, a product improvement project, a new communication channel for a project, etc). Supply (not ordered, initiated by science and technology) Supply-side innovations follow discoveries, inventions and ideas, made by creators (scholars) under the influence of their own curiosity and creative aptitude and individual need for achievement (self-realization). This may include new production technology design or product commercialization projects for markets. 7. Number of creators Uncoupled innovations These are the result of both creative and imitative activities performed by individual rationalizers, who use only their own knowledge and their own financial resources to introduce them. Examples include organizational structure designs and quality policy (quality book). Coupled innovation projects These are the result of the joint efforts and cooperation of a larger number of people, teams and even multiple institutions, which may collaborate on new product of designs, strategic alliance projects, cooperation network projects, and the like. 8. Complexity and size of the project Large Determining whether a project should be considered large, medium or small depends on the measures adopted and the quantifiable assessment of its creators. This measure could include be the scope of component activities, project duration, number of contractors involved and/or the size of financial outlay. Medium   Small   9. Need for project management Profitable Including small B and large R (i.e., limited research and extensive development works). Such projects build on already existing knowledge and are primarily focused on application, with any economic effects achieved in the area of cost savings (e.g., new products from the project, engineering projects, technological projects, and the like). Radical Associated with both "big B and big R", these types of projects enrich both theoretical and practical knowledge and involve high industrial research costs and a higher degree of creativity in the results obtained. They may result in a new method for a project, restructuring projects, new business models, etc. Fundamental "Big B and small R" – this group includes innovations in the realm of theory, providing the basis for technology development, but only in the future. Such initiatives involve high costs and uncertainty about future economic benefits. Examples include new models of organization, using new ingredients in medicine, new technology in the energy sector, or new diagnostic device designs.   1 Source: own elaboration based on: Francik (2003 , p. 48); Świtalski (2005 , pp. 98-99); Wirkus (2006 , p. 18); Grudzewski & Hejduk (2008 , p. 58); Entekhabi & Arabshahi (2012 , pp. 619-622); OECD/Eurostat (2018) ; Dyduch (2019) ; Wang et al. (2020) ; Catto & Maccari (2021). This general classification includes most innovation projects with different degrees of innovation. Taking into consideration the existence of these different classifications, it is reasonable to look at the types of risks involved in their implementation. Overview of types of risks in innovation projects Treating innovation projects as a kind of response to change ([36], p. 109), it should be emphasized that they carry a certain degree of risk, and inadequate management of them can cause failure in their implementation ([65]). It has been recognized that the most common reasons for such projects' failure or success is the knowledge or skills and aptitude of those who manage them ([119], p. 484). There are many more reasons for failures in the implementation of innovative projects. External reasons may include changes in regulations; changes in stakeholder expectations; changes in technology; or mismatch of the project concept to the client's needs. Internal ones may include insufficient funds to complete the project; poor communication and team cooperation; lack of timely completion; underestimating costs; and organizational factors ([126]; [66]; D'Este et al., 2014; [ 8]; Gohar et al., 2021). Risk can be defined as any uncertain event that might fail to serve the interests of stakeholders as stated in the project design ([108], p. 77). For example, engineering projects have more inherent risk, as many contracting parties are involved, including contractors, owners, designers, suppliers, etc. ([ 7]; [ 5]). The implementation and success of innovation projects are highly dependent on the level of risk involved ([113]). Therefore, an important issue to be presented is risk in innovation projects and its management. This is a topic that has been discussed for many years ([55], pp. 112-126; [136]), that remains relevant ([126], pp. 20-35; [137]). Literature on the problems encountered in innovative project research and its development under the conditions of risk are enumerated in the papers of scientists such as [ 1], [77], [48], [140], [22], and [52]. Risk is a combination of internal and external factors that limit or cause disruptions to the achievement of a project's stated goals and significantly affect its profitability, and thus the performance of the entire organization ([116], p. 606). Considering the nature of innovation projects, according to [53], p. 5), a modern approach to risk should be adopted, categorizing risks as either:   threats – the current approach to risk in projects ([30]; [21]) or   opportunities – an innovative approach to risk in projects ([42]; [41], Denney, 2021). The problem of risk in innovation projects is more important and timely than ever, as it is one of the key factors affecting their success ([34], p. 15-16; [119], p. 137; [42]; [97]). In project management methodologies ([104]; [ 4]; PMBoK, 2017; [102]), project risk is defined as the probability of the occurrence of a phenomenon or activity that may have a negative or positive impact on the implementation of an entire project and/or on its individual parts. Project risk means the risk of the project failing to meet technical and/or economic (financial) conditions ([69], p. 7). Project risk can be defined as a project's possibility of failure to achieve its stated objectives. It can be treated as the probability of the occurrence of a phenomenon or activity outside the sphere of influence of the project team that may have positive or negative consequences for the project ([24]; [86], p. 203; [142]). Risk in innovation projects is "the pursuit of opportunities expected under given conditions of uncertainty" ([16], p. 500). Other interpretations of the term "project risk" have been made in [132]; [128]; [56]; [98]; [68]; [130]; [41]; [134]; and [106]. Precise identification of risks is an integral part of analyzing the effectiveness of an innovation project. The management of an innovation project is more complex compared to the implementation of standard projects. This is mainly due to the fact that these are activities implemented under conditions of high risk and uncertainty. Moreover, the scope of such projects is impossible to define in detail, so new challenges may constantly arise during their implementation. That is why risk management of an innovation project requires proper preparation on the part of the project manager and the entire team ([124], p. 12; Stosic et al., 2016). Project risk identification is one of the most important steps in project risk management ([112], p. 29; [97]), because all other steps depend on it ([63], p.101). Risk identification typically involves three types of activities: defining and categorizing risks; conducting internal qualitative surveys on the frequency and severity of each risk; and scanning the external environment for emerging risks ([112], p. 29; [97]). The purpose of risk management in innovation projects is to identify sources of risk. Effectively managing risks relies on their identification, particularly at the front end, before the project concept has been finalized ([108], p. 77). It is also important to identify possible areas of risk occurrence and then measure them, as well as develop appropriate strategies to safeguard against the identified risks (Rogowski, Michalczewski, 2005, p. 15). During risk identification, a risk manager must determine potential threats and opportunities that could occur. Three aspects are central to identifying a potential risk event: who (the affected stakeholders), when (at what point it occurs in the project's life cycle), and what (its impact) ([ 6]; [84]). Considering stakeholder interests during risk identification is considered a best practice ([134]). The high significance of risk in achieving the assumed effectiveness of an innovation project necessitates using a variety of complex, often costly methods and techniques for identification and assessment ([21], p. 72-73). The multidimensionality and multifaceted nature of this issue requires am appropriately multifaceted approach. Effective management of an innovation project also means proper selection and appropriate use of tools to facilitate the elimination of the potential effects of risk ([ 2], p. 916; [116], p. 614). Risks in an innovation project may be related to: the product; the use of new technologies; the use of design methods; the protection of intellectual property; the uniqueness of the project within the organization; the organizational culture; and the required competencies of the project manager ([14], p. 889; [82], p. 76). The types of risks depend upon the type of project ([97], p. 659-660; [138]; [23]). For example, the PMI (Project Management Institute) methodology distinguishes the following categories of risks for research projects: intercultural risk, communication risk, personnel risk, risk of non-acceptance of results, financial risk, management risk, technological risk, and market risk ([91], p. 148-150). For informatic projects, the following categories can be distinguished: risk due to the size of the project; business risk; customer risk; risk in the definition of the construction/ implementation process; development environment risks; technological risk; human resources risk ([69], p. 11); data protection risk; intellectual property risk; communication risk; and risk of changing requirements ([137]). For management projects, categories include risk of management incompetence; risk of choosing the wrong methodology; organizational risk; risk related to organizational culture; communication risk; and personal risk. Table 2 contains the ge

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