Identification of risk types in innovation projects

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” (Łapuńka & Pisz, 2015, p. 800).

Innovation projects are of high importance, and occupy a special place in organizations (Catto & Maccari, 2021). 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 (Kozlov et al., 2021, 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 (Spałek, 2015, 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 (Spałek, 2016, p. 132). The danger of incurring a loss, or the possibility of not achieving the intended goal, is a risk of implementing an innovation (Salerno et al., 2015). 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; Browning, 2019; Willumsen et al, 2019; Qazi et al., 2020).

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 (Salerno et al., 2015). Risk identification is an important step in the process of risk management, involving detecting and categorizing sources of risk (Willumsen et al., 2019; Qazi et al., 2020; Oehmen et al., 2020). It is an iterative process, meaning that it is carried out repeatedly at each stage of a project’s life cycle (Deptuła & Knosala, 2015). 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 (Gorokhovatskyi et al., 2021). 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.

The adopted research methodology does not differ from those presented in the literature and used in the study of problems in management sciences (Apanowicz, 2005; Skarbek, 2013; Czakon, 2015; Matejun, 2021). Due to their specificity, management sciences are of a practical nature and usually refer to empirical research (Januszkiewicz, 2016). The research methodology making it possible to achieve the goal set in the article has been selected in relation to the topic and consisted of several stages. The first stage consisted of conducting a review of Polish and foreign literature on this topic in three publicly available databases: EBSCO, Scopus, Web of Science and Emerald. A literature review is the basis for determining research questions, i.e., the formulation of research problems to which answers are sought. The search for these answers becomes the aim of the work and determines further stages of the research procedure (Zdonek et al., 2016).

The review of the literature concerned three issues (topics): innovation projects, types of risk in innovation projects and the identification stage in the risk management process (Bourgault & Daoudi, 2014; Bowers & Khorakian, 2014; Zinn, 2017; Mammadov, et al, 2018; Jissink et al., 2019; Zaynullinal, 2020; Yuan, 2020). The basic research method at this stage is the analysis of available scientific papers in leading Polish and foreign journals. The analysis of available articles and studies made it possible to determine the type of research problems undertaken so far by various authors, and to identify the existing research gap with regard to risk in innovation projects (Apanowicz, 2005; Babbie, 2005; Ciesielski, 2011; Czakon, 2015).

The literature review we conducted will also enable the development of individual organizations’ own classifications of risk types. This classification was used when creating questions in the survey questionnaire during the empirical research phase, and surveys are one of the most popular quantitative research methods (Lisiński, 2016; Matejun, 2021).

An important element of conducting research is defining its purpose clearly. Research objectives establish a project’s intended effects and help answer specific questions posed by the researcher (Nowosielski, 2016, p. 470; Stańczyk-Hugiet, 2021). The main research goal here was to show current trends in Polish organizations in the field of risk management with regard to innovation projects – in particular, one of the key stages of risk management, the identification of types of risk.

This article is also an attempt to fill a research gap concerning innovative projects, and in particular to identify key features and types of risks occurring in these projects in various organizations. Its practical goal is to develop conclusions and recommendations that can be used by management for more effectively identifying types of risks.

Having established a specific topic and purpose for the research, the research problems can then be outlined in the next stage. It is assumed that research problems are questions to which the researcher wants to obtain answers by carrying out research, so they are a specification of the research goal (Jeszka, 2013; Czakon, 2015). A problem deserves the name of “research” when the matters it concerns are crucial and timely for theory and/or practice (Stańczyk-Hugiet, 2021).

For the purpose of achieving the goal, the following research problems were formulated (Apanowicz, 2005; Babbie, 2005; Saunders et al., 2009; Ciesielski, 2011; Niemczyk 2011; Jeszka, 2013; Zdonek & Hysa, 2017):

What are the key features of various types of innovative projects implemented in the surveyed organizations?

Defining these research problems allowed for the selection of the appropriate type of research tools (Frankfort-Nochnias & Nochnias, 2000; Colllis & Hussey, 2013; Czakon, 2015; Zdonek & Hysa, 2017).

The research method of the diagnostic survey (Januszkiewicz, 2016) was chosen for the study. This allowed for collecting information on the phenomenon of interest, examining the views and beliefs of respondents, and assessing their state of knowledge (Apanowicz, 2005; Dźwigoł, 2015). A questionnaire was used as a technique for collecting information (Czakon, 2015; Matejun, 2016; Januszkiewicz, 2016).

The survey consisted of a metric with detailed questions regarding the subject of the research. The relevance of these questions was verified using pilot studies (Nowak, 2007; Grzeszkiewicz-Radulska, 2012; Dźwigoł, 2015; Januszkiewicz, 2016) and interviews with three project management experts and three risk-management experts (Saunders et al., 2012; Denzin & Lincoln, 2013; Żelazo, 2013). Suggestions made by these experts for some questions helped improve the questionnaire as a research instrument (Sandberg & Alvesson, 2011). The revised questionnaire has already been used in the implementation of the so-called “proper quantitative research” (Staniec, 2012; Czakon, 2016).

The actual research was carried out in April-May 2023 using a questionnaire with the CAWI (Computer Assisted Web Interviewing) method. The questions were mostly closed-ended, and were addressed to a deliberately chosen research sample, which included owners of small organizations and managers who participated in the process of developing, implementing and evaluating innovative projects. The research sample consisted entirely of organizations operating in Poland. These choices were based on previous research on the type of value generated by projects, where an increasing interest in and implementation of various projects, including innovative ones, was noticed (Bartusik & Walas-Trębacz, 2019; Walas-Trębacz & Bartusik, 2021). The respondents were not chosen with any regard to the nature of their business or size; their organizations be producing or providing services or trade in any industry.

Based on the data collected, an analysis of the survey results obtained was conducted (Stopher, 2012; Baran, 2021) and conclusions were formulated in the context of the research problems (Flick, 2020; Piórkowska, 2021). The findings made it possible to propose recommendations for the management of organizations, and to indicate further directions in the implementation of empirical research on this topic (Zdonek & Hysa, 2017; Lenart-Gansiniec, 2021).

The results presented in the article are a consequence of this research methodology, which allowed the authors find answers to the problems that bothered them.

Characteristics of the organizations researched

The research covered 45 organizations, with respondents representing both management positions and business owners. Figure 1 shows the characteristics of respondents’ organizations. The most common characteristics were: organizations that had been operating for 26–35 years (33%); service providers (48%); medium-sized organizations with 50–249 employees (29%) and very large organizations with more than 500 employees (29%); companies serving the domestic market (40%); and companies primarily providing assistance primarily to service companies (20%) and manufacturing companies (19%).

Figure 1.

The main research tasks were identifying key features of innovation projects, and determining the number and dynamics of innovation projects that were carried out during two discrete time frames, 2017–2019 and 2020–2022. Projects were classified as: research and development, organizational, technical-technological, investment, information technology, or projects involving management systems. Another important research task was to identify the level and the types of risks present in each type of innovation project.

Figure 2 shows the seven features of innovation projects (IP) most frequently selected by respondents out of the 12 proposed in the survey questionnaire.

Figure 2.

The statement “innovation projects are interdisciplinary in nature” (19%) emerged as the most common feature. This is an important feature, capturing the essence of innovation projects, as they require the cooperation of people with different skills and knowledge using research methods that correspond to the disciplines they represent.

The next most commonly highlighted feature was “an innovative project is something new, rare and unique” (17%). Many respondents also held the opinions that each innovation project generates value for both stakeholders and the organization itself (17%) and that these projects are characterized by complexity and numerous interdependencies (15%). The value generated by innovation projects is a consequence of the characteristic most frequently named by respondents, which is their interdisciplinarity.

In the next part of the survey, respondents assessed the perceived level of risk in innovation project types implemented during two periods: 2017–2019 and 2020–2022. They used a scale of 0–3 in their assessment, with 0 = no projects, 1 = low activity (one project), 2 = average (two or three projects) and 3 = high activity (more than three projects). Figure 3 shows the activity of the surveyed organizations in implementing the six types of innovation projects for the two periods indicated earlier.

Figure 3.

From the data in Figure 3, it can be observed that in the researched organizations, the greatest amount of activity was undertaken in the 2017–2019 period, in the area of investment projects (38% at “level 3”, a large number of projects) and technical-technological projects (33% at level 3). In the 2020–2022 period, the greatest interest was in investment projects (33% at level 3) and technical-technological projects (31% at level 3). The data also show that the greatest increase of interest between the two periods studied was in projects in management systems (from 20% to 29%) and in IT projects (from 24% to 27%). The greatest decrease in interest can be seen in the implementation of investment projects (from 38% to 33%), technical-technological projects (from 33% to 31%) and research and development projects (from 20% to 18% at level 3, and from 42% to 38% at level 2). This may have been due to the difficulties caused by the occurrence of the Covid-19 pandemic during this period, which contributed to a decline in interest in implementing certain types of projects (investment or R&D), with a greater impact on the implementation of various IT, organizational or management system projects, including performing work remotely. This saved many jobs, improved the organization of the work process, and led to better time management and implementation of automation.

The types of risks occurring in innovation projects were identified from an analysis of the literature and from our own experience. For the purposes of the research, an extensive list of risk categories was proposed in relation to each distinct type of innovation project. The survey questionnaire included a list of risk categories for each project. Respondents evaluated the level of risk present in each type of innovation project on a scale of 0-5, with 1 being a very low level of risk and 5 being a very high level of risk. Tables 3–8 summarize the respondents’ responses in assessing the level of risk in each type of project.

Within the established project types, the respondents rated the levels of occurrence for the following risks as particularly high: time risk, cost risk, personnel risk and technical-technological risk. Respondents also named inadequate competence of the project manager to be the most significant risk in ongoing innovation projects, especially when it was due to the lack or low level of required knowledge, experience, and decision-making, or a lack of coordination in implementation. Detailed results are provided in Tables 3–8. A. Kadareja obtained similar results in his research (2013).

Respondents were also asked to assess the importance of individual stages in the risk management process. Using a 6-point scale (1 = the least important, 6 = the most important), they assessed each stage of the risk management process. Figure 4 shows the structure of the answers.

Figure 4.

Respondents considered the risk identification stage to be the most important in the risk management process (average score 4.65), while the next most important turned out to be the stage of risk monitoring and control (average score 4.52). This fact is corroborated by other researchers such as Salerno (2008), Stosic et al. (2017), and Oehmen et al. (2020).

The issues presented in this article show that in different approaches, both in theory and in practice, to the interpretation of the terms “innovation project” and “innovation project risk”. A major reason is the existence of different types of innovation projects and the many categories of risk within them. The research problems addressed in the article are not among the easily recognizable ones, since the very definitions of “innovation project” and “risk in an innovation project” are not fully explicitly agreed upon, and depend on many different points of view.

The most important conclusions from the empirical research are:

The key features of innovation projects were considered by respondents to be: their interdisciplinary nature; their novelty, uniqueness, and distinctiveness; their generation of value for external stakeholders as well as the organization itself; and their complexity and numerous interdependencies during implementation.

The risk-identification stage was considered by the surveyed project managers to be the most critical in the process of managing the risk of an innovative project.

In conclusion, there is a need to help all actors involved in the preparation and implementation of innovation projects, particularly managers, by better supporting their understanding and identification of risk. This, along with risk management, create a kind of guarantee of security for the organization implementing the project. Assessing risk ensures stable growth and creates conditions for the conscious building of competitive advantage.

It should also be noted that risk identification plays an important role in weathering dynamic changes in the business environment. One can see an increasing number of factors whose impact can be either positive or negative. This situation is causing a continuous increase in the importance of risk management. Many risks that were not present a few years earlier can, today, significantly affect projects and the organizations. Risk management is therefore a forward-looking area, and organizations need to become better and more effective at identifying, analyzing the impact of, and developing solutions to reduce the impact of risks.

The issues addressed in the article do not exhaust such a vast and continuously explored topic by both researchers and practitioners in many organizations. The authors are aware that the scope of the types of research methods used (especially qualitative methods) and the size of the research sample were not fully sufficient, which could have influenced the formulated conclusions. This issue of innovation project risk is constantly developing in the context of changes in the environment and the emergence of new risk categories and factors determining them. Hence, the authors intend to undertake further empirical research in this area on a much wider scale, using both statistical analysis and qualitative methods (e.g., case studies). These will allow for a more in-depth and broader examination and learning about the issues of identifying types of risk. The combined use of various methods (quantitative, qualitative) can contribute to a greater expansion of knowledge on a specific topic (Czarnik, 2020; Klimas, 2021) and provide more comprehensive answers to specific questions (Dźwigoł, 2015). It should also be mentioned that the selection of research methods was conditioned by a specific research problem and research effort. In the opinion of the authors, it will be worth continuing empirical research about the risk of innovation projects, and to set further research goals, including determining the role of cooperation in the process of implementation; what types of internal and external factors affect the failure of implemented projects; the level of formalization for the system of risk management in innovation projects; the level of protection against the occurrence of high risk; and the scope of methods and techniques used in risk management in innovation projects.