The dual nature of innovative activity: How entrepreneurial orientation influences innovation generation and adoption

This paper analyzes two modes of innovation that differ in their scope of newness — innovation generation and adoption. Building a theoretical model based on the Entrepreneurial Orientation literature and utilizing a unique sample of innovating firms, we find that 54% adopt innovations of other firms, 7% generate innovations internally whereas 39% combine the two. We also find that proactivity and risk taking influence the number of innovations generated and the extent to which firms favor generation over adoption and that environmental dynamism moderates one of these relationships. These findings add to the innovation and Entrepreneurial Orientation literatures.

[1]  Wallace E. Carroll,et al.  Determinants of transnational new product development capability: testing the influence of transferring and deploying tacit overseas knowledge , 2001 .

[2]  Gregory G. Dess,et al.  Linking Two Dimensions of Entrepreneurial Orientation to Firm Performance: The Moderating Role of Environment and Industry Life Cycle , 2001 .

[3]  I. Nonaka.  A Dynamic Theory of Organizational Knowledge Creation , 1994 .

[4]  Kimberly M. Green,et al.  Strategic Process Effects on the Entrepreneurial Orientation–Sales Growth Rate Relationship , 2006 .

[5]  S. Zahra,et al.  Absorptive Capacity: A Review, Reconceptualization, and Extension , 2002 .

[6]  Haiyang Li,et al.  Product Innovation Strategy and the Performance of New Technology Ventures in China , 2001 .

[7]  Ishtiaq P. Mahmood,et al.  Government's Dilemma: The Role of Government in Imitation and Innovation , 2005 .

[8]  J. March.  Exploration and exploitation in organizational learning , 1991, STUDI ORGANIZZATIVI.

[9]  B. Menguc,et al.  Just entrepreneurial enough: the moderating effect of entrepreneurship on the relationship between market orientation and performance , 2005 .

[10]  D. Slevin,et al.  Strategic management of small firms in hostile and benign environments , 1989 .

[11]  Allen C. Bluedorn,et al.  The relationship between corporate entrepreneurship and strategic management , 1999 .

[12]  P. H. Friesen,et al.  Archetypes of Strategy Formulation , 1978 .

[13]  Robert M. Bunch,et al.  The Innovation Cycle: A New Model and Case Study for the Invention to Innovation Process , 2005 .

[14]  Salvatore Sciascia,et al.  Market orientation as determinant of entrepreneurship: An empirical investigation on SMEs , 2006 .

[15]  Johan Wiklund,et al.  Entrepreneurial orientation and business performance: Cumulative empirical evidence , 2004 .

[16]  K. Knight.  A Descriptive Model of the Intra-Firm Innovation Process , 1967 .

[17]  Zi-Lin He,et al.  Exploration vs. Exploitation: An Empirical Test of the Ambidexterity Hypothesis , 2004, Organ. Sci..

[18]  Fernando F. Suarez,et al.  The Role of Environmental Dynamics in Building a First Mover Advantage Theory , 2007 .

[19]  F. Damanpour.  Organizational complexity and innovation: developing and testing multiple contingency models , 1996 .

[20]  D. Teece.  Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy , 1993 .

[21]  Leslie E. Papke,et al.  Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates , 1993 .

[22]  Johan Wiklund,et al.  Innovation and imitation as sources of sustainable competitive advantage , 2007 .

[23]  Réjean Landry,et al.  Lessons from Innovation Empirical Studies in the Manufacturing Sector: A Systematic Review of the Literature from 1993-2003 , 2006 .

[24]  D. B. Montgomery,et al.  First‐mover advantages , 1988 .

[25]  James D. Thompson.  Organizations in Action , 1967 .

[26]  Jacob Cohen,et al.  Applied multiple regression/correlation analysis for the behavioral sciences , 1979 .

[27]  Kathleen M. Eisenhardt,et al.  DYNAMIC CAPABILITIES, WHAT ARE THEY? , 2000 .

[28]  Johan Wiklund,et al.  Risk, proactivity and uncertainties as determinants of the decision to imitate or to innovate , 2007 .

[29]  A. Lievens,et al.  Antecedents of Project Learning and Time-to-Market During New Mobile Service Development , 2003 .

[30]  J. Pennings,et al.  Internal capabilities, external networks, and performance: a study on technology‐based ventures , 2001 .

[31]  S. Gopalakrishnan,et al.  Theories of organizational structure and innovation adoption: the role of environmental change , 1998 .

[32]  A. V. D. Ven,et al.  Explaining Development and Change in Organizations , 1995 .

[33]  P. Khandwalla.  The design of organizations , 1977 .

[34]  K. Zhou.  Innovation, imitation, and new product performance: The case of China , 2006 .

[35]  M. Lieberman,et al.  Why Do Firms Imitate Each Other , 2006 .

[36]  G. Tellis,et al.  Pioneer Advantage: Marketing Logic or Marketing Legend? , 1993 .

[37]  R E Miles,et al.  Organizational strategy, structure, and process. , 1978, Academy of management review. Academy of Management.

[38]  Johan P. Olsen,et al.  THE UNCERTAINTY OF THE PAST: ORGANIZATIONAL LEARNING UNDER AMBIGUITY* , 1975 .

[39]  L. Pepall.  Imitative Competition and Product Innovation in a Duopoly Model , 1997 .

[40]  Mikael Holmqvist,et al.  Experiential Learning Processes of Exploitation and Exploration Within and Between Organisations : An Empirical Study of Product Development, Department of Business Studies , 2003 .

[41]  D. Shepherd,et al.  Entrepreneurial Orientation and Small Business Performance: A Configurational Approach , 2005 .

[42]  G. T. Lumpkin,et al.  The Role of Entrepreneurial Orientation in Stimulating Effective Corporate Entrepreneurship , 2005 .

[43]  Edgard R. Rodriguez,et al.  SME Export Performance in Indonesia After the Crisis , 2006 .

[44]  J. Kimberly,et al.  Organizational innovation: the influence of individual, organizational, and contextual factors on hospital adoption of technological and administrative innovations. , 1981, Academy of Management journal. Academy of Management.

[45]  Wendy K. Smith,et al.  A Structural Approach to Assessing Innovation: Construct Development of Innovation Locus, Type, and Characteristics , 2002, Manag. Sci..

[46]  Henry Mintzberg.  Strategy-Making in Three Modes , 1973 .

[47]  F. Damanpour,et al.  Research on innovation in organizations: Distinguishing innovation-generating from innovation-adopting organizations , 2006 .

[48]  Steven P. Schnaars.  Managing Imitation Strategies: How Later Entrants Seize Markets from Pioneers , 1994 .

[49]  P. Bierly,et al.  Analyzing innovation adoption using a knowledge-based approach , 2001 .

[50]  Dean A. Shepherd,et al.  RESEARCH NOTES AND COMMENTARIES: KNOWLEDGE-BASED RESOURCES, ENTREPRENEURIAL ORIENTATION, AND THE PERFORMANCE OF SMALL AND MEDIUM-SIZED BUSINESSES , 2003 .

[51]  J. Schumpeter.  The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle , 1934 .

[52]  G. Hodgson,et al.  Balancing Inertia, Innovation, and Imitation in Complex Environments , 2006 .

[53]  O. Richard,et al.  CULTURAL DIVERSITY IN MANAGEMENT, FIRM PERFORMANCE, AND THE MODERATING ROLE OF ENTREPRENEURIAL ORIENTATION DIMENSIONS , 2004 .

[54]  Choonwoo Lee,et al.  Internal capabilities, external linkages, and performance. A study on technology-based ventures , 2001 .

[55]  R. Wolfe.  ORGANIZATIONAL INNOVATION: REVIEW, CRITIQUE AND SUGGESTED RESEARCH DIRECTIONS* , 1994 .

[56]  D. Shepherd,et al.  Knowledge‐based resources, entrepreneurial orientation, and the performance of small and medium‐sized businesses , 2003 .

[57]  R. Schmalensee.  Product Differentiation Advantages of Pioneering Brands , 1980 .

[58]  Pat H. Dickson,et al.  A hierarchical perspective of the dimensions of entrepreneurial orientation , 2009 .

[59]  G. Grossman,et al.  Innovation and growth in the global economy , 1993 .

[60]  Tom R. Burns,et al.  The Management of Innovation. , 1963 .

[61]  M. Porter.  TECHNOLOGY AND COMPETITIVE ADVANTAGE , 1985 .

[62]  Roberto Verganti,et al.  Strategies of Innovation and Imitation of Product Languages , 2007 .

[63]  Mohan Subramaniam,et al.  The Influence of Intellectual Capital on the Types of Innovative Capabilities , 2005 .

[64]  Rita Gunther McGrath.  Advantage from adversity: Learning from disappointment in internal corporate ventures , 1995 .

[65]  Bradley Alan George,et al.  Entrepreneurial Orientation: A Theoretical and Empirical Examination of the Consequences of Differing Construct Representations , 2011 .

[66]  F. Damanpour.  Organizational Innovation: A Meta-Analysis Of Effects Of Determinants and Moderators , 1991 .

[67]  M. Frese,et al.  Entrepreneurial Orientation and Business Performance: An Assessment of past Research and Suggestions for the Future , 2009 .

[68]  Book Review: Managing Imitation Strategies: How Later Entrants Seize Market Share from Pioneers , 1995 .

[69]  S. Winter,et al.  An evolutionary theory of economic change , 1983 .

[70]  Stanley F. Slater,et al.  Product‐market Strategy and Performance: An Analysis of the Miles and Snow Strategy Types , 1993 .

[71]  David J. Miller,et al.  The Correlates of Entrepreneurship in Three Types of Firms , 1983 .

[72]  Stuart L. Hart,et al.  An Integrative Framework for Strategy-Making Processes , 1992 .