This component provides and overview as to why innovation is perceived to be important by government and business. There are references to many policies that have a direct impact on how business relates to and perceives innovation.

"Innovation" is a term that is popular with governments but also businesses, education and research communities. It is meant to encapsulate in one way or another the recognition that in a global economy, with its societies increasingly dependent on knowledge and communication, progressing efficiency, effectiveness and appropriateness of our products, processes and systems at all levels and in all areas is key to sustaining competitiveness and meeting the challenges of the future. For example the British Minister for Science and Innovation emphasised that “the successful exploitation of new ideas from science, technology and emerging management practices has a crucial role in raising productivity. The most successful economies of the future will be those which excel at generating and disseminating knowledge and exploiting it commercially” (see “Innovation into Success”, UKSPA, Issue 1, 2003) or in their report the British Chamber of Commerce indicated that UK productivity is under threat because small and medium sized enterprises (SMEs) are failing to exploit the benefits of technology. (see Using IT: Small Firms and Technology, 2002).

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