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When does lack of resources make new firms innovative (2005)
| Venue: | Academy of Management Journal |
| Citations: | 43 - 3 self |
BibTeX
@ARTICLE{Katila05whendoes,
author = {Riitta Katila and Scott Shane and Kathy Eisenhardt and Anil Gupta and Andy Henderson},
title = {When does lack of resources make new firms innovative},
journal = {Academy of Management Journal},
year = {2005},
pages = {814--829}
}
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Abstract
We extend the resource-based perspective to explain innovation in new firms that have yet to develop resources. Using data on firms ’ efforts to commercialize technological inventions, we tested a model of the environmental conditions under which new firms’ lack of resources alternately promotes or constrains innovation. We found that new firm innovation is greater in competitive and small markets, and in environments that do not demand extensive production assets. When are new firms innovative? Organizational researchers have long studied this question, but mixed findings have emerged from these studies. Some scholars have suggested that new firms, which cannot use existing firm knowledge (Cohen & Levinthal, 1990) and resources (Teece, 1986), have trouble innovating. However, other authors have argued exactly the opposite: New firms are highly innovative because their innovative efforts do not cannibalize their existing products (Arrow, 1962) or require them to filter new knowledge through organizational routines and structures that are ill-suited to that purpose (Henderson & Clark, 1990). More recently, researchers have sought to reconcile these conflicting perspectives by focusing on the nature of the new technology, arguing that new firms are better suited to developing radical innovations than incremental ones (Christensen & Bower, 1996; Hamilton & Singh, 1992). Although extremely informative, this approach fails to explain an important empirical phenomenon: Why are new firms better at innovation in some industries than in others?
Keyphrases
new firm incremental one innovative effort new knowledge radical innovation extensive production asset firm effort small market environmental condition organizational routine resource-based perspective new firm innovation trouble innovating important empirical phenomenon new technology firm knowledge mixed finding hamilton singh existing product cohen levinthal technological invention christensen bower organizational researcher henderson clark
