Technological capability, strategic flexibility, and product innovation

Abstract

This paper examines the role of technological capability in product innovation. Building on the absorptive capacity perspective and organizational inertia theory, the authors propose that technological capability has curvilinear and differential effects on exploitative and explorative innovations. The findings support the proposition that though technological capability fosters exploitation at an accelerating rate, it has an inverted U‐shaped relationship with exploration. That is, a high level of technological capability impedes explorative innovation. Strategic flexibility strengthens the positive effects of technological capability on exploration, such that when strategic flexibility is high, greater technological capability is associated with more explorative innovation. Copyright © 2009 John Wiley & Sons, Ltd.

Does incremental and radical innovation performance depend on different types of knowledge accumulation capabilities and organizational size?

“…The results thus support O'Reilly and Tushman's caution to managers that "being large and successful at one point in time is no guarantee of continued survival " (2008:186). Therefore, firms with a large number of employees should invest resources in developing practices that promote communication and coordination between different parts of the organization and between the organization and the agents in the environment, and that establish more organic and flexible hierarchical structures (Tsai and Wang, 2005;Zhou and Wu, 2010). The distinction between different types of innovation performance in this study can help to solve the inconclusiveness of the relationships between size and innovation performance, as positive, negative, and curvilinear relationships have been put forward in the literature (Sorensen and Stuart, 2000).…”

“…Tödtling et al (2009) study of 400 Austrian firms shows that products new to a firm's market have a greater requirement for a combination of internal R&D, and patenting and cooperation with universities and research organizations. Zhou and Wu's (2010) findings suggest that to sustain explorative or radical innovation performance in products, firms with strong technological capabilities must combine them with the development of dynamic capabilities that enable them to reallocate resources, to break down existing operational routines and to absorb and use new knowledge to address discontinuities in the environment.…”

“…Size was measured by a continuous scale using the number of employees in the firm, which is the most commonly applied proxy for size in previous studies related to innovation performance (e.g., Camisón et al, 2004;Tsai and Wang, 2005;Zhou and Wu, 2010).…”

“…Managers in larger organizations develop bureaucratic procedures to reduce risks, maintain stability and improve efficiency when the hierarchy and rules replace ad hoc methods of operation (Jones and Butler, 1992) and undermine new resource allocation patterns (Gilbert, 2005). These mechanical structures favour the improvement of existing products, processes and methods, that is, incremental innovation performance, but can generate strong pressure against radical changes from the status quo, which provide uncertain returns (Zhou and Wu, 2010). The inclusion of the internal control variable 'number of hierarchical levels' allows us to test the robustness of the results of the effect of size on both types of innovation performance, as the literature has considered it a good indicator of firm's size (Baldridge and Burnham, 1975;Jones and Butler, 1992).…”

Strategies for Superior Performance in Recessions: Pro or Counter-Cyclical?

“…But new resource acquisition or development are restricted by lower availability of cash and time constraints. Thus, strategic flexibility becomes important for quick relocation of resources from their original departments and adaptation to new purposes (Wang, 2008) and also for effective coordination of this new resource configuration (Zhou & Wu, 2010). This way, the firm can efficiently implement the new, counter-cyclical strategy and experiment with new products (McGrath, 1999) to reach other consumers.…”