New products and processes and significant technological improvements in products and processes. An innovation has taken place if it has been introduced on the market (product innovation) or used within a production process (process innovation).
Depending on context, products and processes can be new or improved anywhere in the world, or new or improved in relation to a firm, a market or a country. It is a process or outcome that must meet two criteria. The first criterion is novelty: Although innovations need not necessarily be original, they must be new to the user, context, or application. The second criterion is improvement.