Establishing Kaizen in small- and medium-sized German enterprises: A concept to drive innovation

AuthorVolker Doberanzke
Vol. 4 No. 2
June, 2020
European Journal of Economics, Law and Social Sciences
IIPCCL Publishing, Graz-Austria
ISSN 2519-1284
Acces online at
Establishing Kaizen in small- and medium-sized German enterprises: A
concept to drive innovation
Dr Volker Doberanzke
The ability to innovate is crucial, not just for national economies but also for all kinds of
companies. Kaizen is the Japanese concept of management based on a philosophy of eternal
change, which is to keep a continuous improvement process going. The Kaien concept has
beenwidelyappliedspecicallyinindustriesthatare dominatedbylargeandmultinational
players, such as the automotive sector. In most European countries, small- and medium-sized
enterprisesplay a major role specicallyin GermanyIt is all the moresurprising that the
Kaizen approach has thus far been de facto irrelevant in the literature dealing with small-
and medium-sized companies. This article shows that the Kaizen philosophy provides an
appropriate strategic basis for establishing a continuous innovation process in small- and
mediumsized companies The rst part of this article explains the basic characteristics of
the concept of innovation and the importance of small- and medium-sized companies and
their ability to innovate. The second part outlines the Kaizen approach and its fundamental
paradigms. The third part describes how a Kaizen-based, continuous innovation process can
Keywords: Kaizen; innovation; continuous improvement; medium-sized companies.
From an economic perspective, the innovative strength of companies is of crucial
importance. Without innovation, any economy runs the risk of losing its potential
togenerategrowthInthiscontextthesocalledpioneer companiesplayaspecial
role: on the one hand, they are the engine and driver for new growth impulses, while
on the other hand, the innovative entrepreneur has the chance of a (temporary)
A country's ability to innovate forms the basis for long-term growth and employment.
One important indicator of the ability of a country to innovate is that of the number
with the European PatentOce Of this  were from the US approximately
countriesGermany onlycomes inninth placeGII Switzerland is atthe top
how the Kaizen approach can be used to increase the ability to innovate, especially in
the sector for small- and medium-sized companies, which is a particularly important
Inthe context of the organization of innovationie innovation management it is
European Journal of Economics, Law and Social Sciences
IIPCCL Publishing, Graz-Austria
Vol. 4 No. 2
June, 2020
ISSN 2519-1284
Acces online at
necessary to specify the term innovation. For reasons of measurability and active
management of innovation, it is essential in practice that everyone involved in the
process of innovation management de-velops a uniform understanding of the term.
This is an important prerequisite to generate inno-vation in a targeted manner. It
should be borne in mind that the development and implementation of highly
innovative ideas in the operational production process require special treatment and
aention otherwise the company runs the risk of neglecting fundamental aspects
of risk management. In the literature on innovation theory, the term innovation is
systematized according to various criteria Hauschild etal  A common
and relevant dierentiation here is the distinction between product and process
Product innovations are innovations in goods and services that - from the perspective
of the consumer  result in new qualitative consumption experiences Product
innovation is therefore an innovation on an existing product or an entirely new
product. This demand-oriented perspective can be contrasted with the supply-
oriented concept of innovationdened by Schumpeter Schumpeter   
Thereaera distinction can be made between Invention ie a completely new
productthroughtechnicalinventionImitationie imitationandmodicationof
an innovation), and an innovation in the narrower sense (i.e., implementation of an
innovation by the entrepreneur). In contrast to product innovations, which primarily
directed inwards. These are improvements to operational, mostly internal processes
in the company. However, process innovations are not limited to processes in the
narrower sense. In principle, process innovations can target the entire operational
ecosystemfrom theorganizational structure theprocess ows theinterfaces the
internalowof informationand materialsetc Awellknownexampleof aprocess
innovation is the assembly line production that was introduced at the beginning of
theth centuryIn the contextofthe establishment of a Kaizenbasedcontinuous
innovation process for medium-sized companies, the introduction of such a concept
is, in itself, an innovation for the individual company. In practice, however, it can
regularly be ascertained that process innovations are usually triggered when a certain
event relevant to results (e.g., an accident or the incorrect handling of a process)
has occurred This then usually leads to ad hoc measures to eliminate identied
procedural weaknesses. The establishment of a Kaizen-based, continuous innovation
process includes both product innovation and process innovation.
Small- and medium-sized enterprises in Germany
Before the importance of small and mediumsized enterprises for the German
economy is dis-cussed, the demarcation criteria for medium-sized companies should
bebrieypresented AccordingtoaEuropeanUnion EUrecommendation small
andmediumenterprisesSMEsincludecompanies withfewerthanemployees
eitherwith salesof less than million eurosor total assetsof less than million
eurosEU Commission Another denitionof the Institutefor SME Research

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