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The Theoretical Relevance of Innovation Research in the Study of Organizations

Despite the attractiveness of the idea of creative and flexible organizations, the topic of organizational innovation has never been central in either organizational or management theory and research (see such textbooks as Hall 1991, Scott 1992, or any of the management textbooks in organizational theory such as Daft 1989 and Mintzberg 1979). Yet, innovations reflect a critical way in which organizations respond to either technological or market challenges (Brenner 1987, Gomes--Casseres 1994, 1996, Smith et al 1992, Hage 1988). In particular, technological advance is increasingly the basis of competition between nations (Kitson&Michie 1998, Porter 1990). As Zammuto& O'Connor (1992) demonstrate, most systems of flexible manufacturing adopted in the United States have had little impact on flexibility and only half have improved productivity, raising serious questions as to why, and about the long-term prospects for the United States (Jaikumar 1986). Businesses have come to realize the importance of innovation for survival in a world of global competition. A recent report from the British Department of Trade and Industry (Sullivan 1998) indicates that the major companies, irrespective of country-France, Germany, Italy, Japan, Sweden, United Kingdom, and the United States-spend between 4% and 5% of sales on research in the automobile and the commercial aircraft industries, from 5% to 8% in the three sectors of semi-conductors and computers, electrical products, and chemical products and 10% to 15%% in the health products, pharmaceuticals, and software sectors. In the past year, the research and development (R&D) spending in the top 300 companies world-wide increased 12.8%, with the largest increases in some 100 American companies. While this may be an exceptional increase, it continues the long-term trend since 1975 (Hage& Powers 1992:32) of annual growth of 4% to 5% above inflation per annum in private expenditure, at least in the American firms.

The Definition of Organization Innovation and Styles of Research

Organizational innovation has been consistently defined as the adoption of an idea or behavior that is new to the organization (Damanpour 1988, 1991, Daft & Becker 1978, Hage 1980, Hage& Aiken 1970, Zaltman, Duncan &Holbek 1973, Oerlemans et al 1998, Wood 1998, Zummato& O'Connor 1992). The innovation can either be a new product, a new service, a new technology, or a new administrative practice. The research usually focuses on rates of innovation and not on single innovations except in the instance of diffusion studies (e.g. Collins et al 1987, Ettlie et al 1984, Walton 1987) where the speed of adoption is an issue. The importance of studies of innovation rates rather than a case study of a single innovation must be stressed. In the metaanalysis of Damanpour (1991), he found that the greater the number of innovations considered in the research study, the more consistent the findings. This is an important conclusion, namely, that the focus on rates of a phenomenon will produce more consistent results than the analysis of a single event. Here lies one of the major methodological reasons why organizational sociologists have not always been able to observe an accumulation of findings. Although the definition has remained consistent, the particular kinds of innovation examined have shifted across time as well as have the kinds of problems that have interested people. In the 1960s and 1970s the emphasis was on incremental change in public sector organizations (Allen & Cohen 1969, Daft & Becker 1978, Hage& Aiken 1967, Kaluzny et al 1972, Moch 1976), while in the 1980s and 1990s it has been on radical change in private sector organizations (Collins et al 1987, Cohn &Turyn 1980, Ettlie et al 1984, Gerwin 1988, Jaikumar 1986, Teece 1987, Walton 1987). Examples of the latter include flexible manufacturing (Collins et al 1987, Gerwin 1988, Teece 1987), retortable pouches (Ettlie et al 1984), robotics, automated handling of materials, or computer numerically controlled machines (Jaikumar 1986), and even ship automation (Walton 1987) and shoe production (Cohn &Turyn 1980). Furthermore, the measures for "radical" altered from subjective ones (Kaluzny et al 1972) to more objective ones (Cohn &Turyn 1980, Collins et al 1987, Ettlie et al 1984, Walton 1987). As this shift in focus occurred, the nature of the problem being investigated also changed. Rather than simply count the number of adoptions within a particular time period, the analytical focus became differential implementation of radical innovations, most typically advanced manufacturing technologies (see Zammuto& O'Connor 1992). What kinds of innovation have not been studied? This is always the more difficult but necessary question in any review. Essentially there are two kinds of organizational innovations that have not received much attention. The first lacuna is the examination of radical innovations in the components of assembled products such as cars, commercial airplanes, and trains. By and large the organizational innovation literature has focused on simple products or services rather than the assembled variety. But some of the most interesting radical innovations are occurring in the components of assembled products. To take cars as one example, there have been air bags, anti-lock disk brakes, geographical positioning systems, fuel efficient engines, etc. The second lacuna is radical innovations in what are called large-scale technical systems (Mayntz& Hughes 1988) such as electrical, railroad, and telephone systems. Some radicalinnovations in these areas include nuclear energy, high-speed trains, and coaxial cables. And this is to say nothing about the emergence of new radical large scale technical systems such as satellite television and internet. We need a shift in focus to assembled products and large-scale technical systems because of their importance in the post-industrial economy.