Compliance–innovation: integrating quality and compliance knowledge and practice

Abstract

Motivated by a gap in the literature linking compliance and innovation, this paper develops the novel concept of Compliance–Innovation (C–I). Based on a review of the literature and interviews with experienced practitioners, we characterise C–I as a transformational process to drive organisational improvements in sustainability and competitiveness. We explain how the organisational mechanism that permits identification and exploitation of knowledge for commercial purposes, i.e. Absorptive Capacity, may be enlarged through application of C–I because both external and internal contexts are appropriately and comprehensively incorporated. C–I's roots lie in the integration of quality and compliance knowledge into a central IT repository, and its potential for commercial exploitation through, for example, the Six Sigma approach is outlined – indicating its usefulness for orienting business focus, performance and innovation.

Keywords:

• quality
• compliance
• innovation
• Six Sigma
• sustainability
• absorptive capacity
• knowledge management

Notes

1. The OCEG (2012) argue that context is a critical factor in building stronger GRC capabilities.

2. For example, Roper et al. (2008, p. 962) lists the five different types of knowledge sourcing activity shaping firms' innovation as: (1) in-house R&D, (2) forward linkages to customers, (3) backward links to either suppliers or external consultants, (4) horizontal linkages to either competitors or through joint ventures and (5) linkages to universities or other public research centres.

3. McKinsey (2007) finds that the integration of GRC and innovation activities provides managers with greater insight into the innovation process, allowing managers to be more confident in their decision-making.