A FRESH LOOK AT INCREMENTAL AND RADICAL INNOVATION IN THE ENTREPRENEURIAL FIRM DAWN R. DETIENNE (STUDENT) University of Colorado College of Business and Administration Campus Box 419University of Colorado Boulder, Colorado 80309-0419 Tel: (303) 492-4865 Fax: (303) 492-5962 e-mail: [email protected]CHRISTINE S. KOBERG University of Colorado Graduate School of Business Administration Campus Box 419 Boulder, Colorado 80309-0419 Tel: (303) 492-8677 Fax: (303) 492-5962 e-mail: [email protected]KURT A. HEPPARD United States Air Force Academy Department of Management 2354 Fairchild Drive; Suite 6H94 USAF Academy CO 80840-5701 Tel: 719-333-4130 Fax: 719-333-2944 email: [email protected]Prepared for the USASBE/SBIDA 2001 National Conference in Orlando, Florida
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A FRESH LOOK AT INCREMENTAL AND RADICALINNOVATION IN THE ENTREPRENEURIAL FIRM
DAWN R. DETIENNE (STUDENT)University of Colorado
College of Business and AdministrationCampus Box 419University of Colorado
Prepared for the USASBE/SBIDA 2001 National Conference in Orlando, Florida
ABSTRACT
A FRESH LOOK AT INCREMENTAL AND RADICAL INNOVATION IN THE
ENTREPRENEURIAL FIRM
Highly innovative and entrepreneurial firms, those generating ideas aimed at new andenhanced products, manufacturing processes and services, require entrepreneurial leaderswho successfully manage the innovation process to discover or create, and then exploitopportunities (Oster, 1994: Venkataraman & Shane, 1998). This paper investigateswhether innovations, categorized into incremental and radical, could be arranged in aprogressive hierarchy of ascending order according to scope and scale. We examinedenvironmental characteristics (dynamism); organizational characteristics (age, size andintrafirm linkages); organizational processes (improvisation, experimentation andtransitioning); and managerial characteristics. Our findings suggest that a different mixof environmental and organizational characteristics and processes explain incrementaland radical innovation.
Highly innovative and entrepreneurial firms, those generating ideas aimed at new and
enhanced products, manufacturing processes, and services, require entrepreneurial
leaders who successfully manage the innovation process to discover or create, and then
findings suggest that radical innovation had a positive association with the processes,
experimentation and transitioning or sequencing steps whereas incremental innovation
did not. That is, core processes may not be the same in all organizational settings. Those
firms that produce radical innovations may be more likely to engage in improvisation,
experimentation and transitioning processes.
We expected to find that higher educated, younger managers with a shorter tenure
in the company would be positively related to incremental and radical innovation of the
firm. We found CEO age to be a significant negative predictor of incremental
innovation. That is, lower CEO age was significantly related to incremental innovation,
but we were unable to show the same to be true for radical innovation (although it was in
the same direction, just not significant). Neither education nor tenure were significant
predictors of radical or incremental innovation.
Our findings are limited by the inherent difficulties in performing a cross-
sectional study, drawing generalizations from two industries, and disentangling cause and
effect. For example, we need to consider the extent to which perceived environmental
dynamism contributes to innovation, and the reverse possibility that incremental and
radical innovation contribute to perceptions of environmental change. Also, although we
quantified the degree to which entrepreneurial managers undertake incremental and
radical innovation, we failed to measure the intervening variable of choice, and we did
not examine the relationship between innovation and firm performance. Despite its
importance to scholars and practitioners alike, performance was difficult to measure
because the majority of firms in our sample are not publicly traded and reliable
performance data are difficult or impossible to obtain. Future research is needed to
investigate other environmental and organizational antecedents of incremental and radical
innovation such as environmental scanning, interorganizational linkages, and
organizational norms.
Our findings have implications for entrepreneurial managers who seek to
innovate in fast-paced and highly competitive environments. Those leaders must
successfully manage the innovation process if they want to discover, create and exploit
opportunities. This study has suggested that age and size of the firm as well as a dynamic
external environment will increase innovation potential. But these are variables that are
generally outside the scope of the entrepreneurial manager’s duties. Even so, this study
has also suggested that there are steps that the entrepreneurial manager can take to
increase innovation potential and these steps include the use of intrafirm linkages.
Entrepreneurial managers must find ways, whether it be through networking, cross-
project communications, the mixing of old and new team members or other creative
ideas, to increase intrafirm structural linkages.
Additionally, the use of improvision and experimentation are organizational
processes that entrepreneurial managers should consider. Those managers who are able to
balance on the edge between structure and flexibility (improvision) and those who
attempt to gain insight into the future that may yet unfold (experimentation) are more
likely to be able to discover, create and exploit opportunities. In a world that at times
appears to be moving at the speed of sound, it is imperative that entrepreneurial managers
seek out and use those tools which will propel them successfully into the future.
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