Abstract

The competitiveness of an organization relies mainly on its ability to adapt to new changes in its environments. Additionally, process and product innovation increase productivity significantly only when accompanied by an organizational innovation. This study was therefore carried out to understand organizational innovation and key factors which influence it in small rural food industries of Tehran Province, Iran. Findings show that radical changes are mostly pursued rather than incremental changes. Factors which influence "incremental" organizational innovations are firms age (negatively), product diversification, and firms’ capacity of production (positively). Also the capacity of production, product diversification, managers' experience (positively) and competition intensity (negatively) influence "radical" organizational innovation. Finally, discussions are provided for improving the organizational innovation in the studied firms.

Key words: Organizational innovation, food industries, small industries, incremental innovation, radical innovation.