Management innovation is the introduction of management practices new to the firm and intended to enhance firm performance. Building on the organizational reference group literature, this article shows that management innovation is a consequence of a firm"s internal context and of the external search for new knowledge. Furthermore the article demonstrates a trade-off between context and search, in that there is a negative effect on management innovation associated with their joint occurrence. Finally the article shows that management innovation is positively associated with firm performance in the form of subsequent productivity growth.Key words: Management innovation, management practices, performance, knowledge sources 3
THE SOURCES OF MANAGEMENT INNOVATION: When Firms Introduce New Management PracticesThe phenomenon of innovation continues to attract enormous interest among management scholars. Beyond the ubiquitous technological and product innovation, a number of subfields have emerged, concerned with aspects of innovation, such as business model innovation (e.g., Markides, 1997), service innovation (e.g., Gallouj and Weinstein, 1997) and process innovation (e.g., Pisano, 1996). This article focuses on one subfield, namely management innovation (Birkinshaw, Hamel, and Mol, 2008) and its antecedents in and consequences for individual firms. Hamel (2006;2007) in particular has forcefully argued that in today"s age management innovation may represent one of the most important and sustainable sources of competitive advantage for firms because of its context specific nature among others. That makes any study into this topic particularly relevant for practice but also important from the perspective of the study of sustainable competitive advantage, a key domain of strategic management and other academic areas.For some researchers, management innovation refers to a practice or structure that is "new-to-the-state-of-the art", meaning that it has no known precedent (e.g., Chandler"s (1962) description of the invention of the M-Form structure); for other researchers, management innovation refers to something that is "new to the firm" and is adapted from another context, such as a peer firm (e.g., Zbaracki, 1998). Each approach has its own body of literature and, while both fit under the banner of management innovation, it is to the latter body of literature this article contributes. This research defines management innovation as the introduction of management practices that are new to the firm and intended to enhance firm performance. 4 The introduction of new management practices is an important issue for firms as they seek to upgrade their productivity, improve the quality of customer offerings and retain competitiveness (Ichniowski, Shaw, and Crandall, 1995;Pil and MacDuffie, 1996). Policymakers see such practices as important drivers of sector-level or national improvements in productivity.For example, the DTI Innovation Survey and "Porter Report" (published in 2003) highlights the poor adoption of ...