Understanding organizational innovation

from its practice

Valencia, 21st February 2013

Maria Larraza Malkorra

Faculty of Social and Human Sciences – University of Deusto

Introduction - widening innovation

From To

• Technology

• R&D

• Oslo Manual – 3rd edition

• Organizational Innovation as a

commonly acknowledged source of

competitive advantage

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Innovation

Concept

Process

Applied to

ORGANIZATIONAL

INNOVATION (OI)

Still ambiguous (Lam, 2005)

Still methodologically challenging (Kirner et al. 2008)

Understanding and diffusion still restricted

• Linear

• Sequential

• Predictable

• Complex, self-referential, feedback

loops

• Requiring social and organizational

changes

Why is OI still ambiguous?

Two literature streams: Organizations // Innovation (Lam, 2005)

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1. Structural forms and innovativeness

2. Innovation as organizational learning and

knowledge creation in organizations

3. Organizations capacity to change & adapt

All related but separated

Lack of consensus about

a common conceptual

framework

Differentiating from Organizational Change • Oslo Manual 2005

– Implementing on business practices, work organization or external relations

– New to the firm

– Strategic reason

• Som et al., 2012: Strategic reason oriented to considerable improvement of competitive advantage or economic performance

Elements also

appearing at

organizational change

literature

(Van de Ven, 1992;

Poole, 2004)

Why is OI still methodologically challenging?

• Empirical basis for its measurement is weak and scattered

– Lack of reliable scales

– Intangibility of OI’s goals

Armbruster et al., 2006

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• Complexity for measuring OI’s effects

– Different aggregation levels

– Long life cycles

– Internal differences on the extent of implementation

– Multidimensional relationship between OI and its outcomes

Kirner et al., 2008

Purpose of this research

Deeply understand organizational innovation:

– How is the process developed and interpreted in practice?

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Generate new theoretical insights about organizational innovation for

further research and diffusion

Looking for references

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• Management theory – process perspective vs. variance

– Applied to Organizational Change - resulting in 4 models, not

directly applicable to OI Van de Ven, 1992; Poole, 2004

• Innovation theory – different modes of innovation processes

– Generation: creating a new opportunity or making use of an

existing one in novel ways

• Creative process covering all efforts and activities combining

new and known ideas

– Adoption: assimilation of a product, service or technology

created elsewhere and new to the adopting organization

• Two sub-processes: initiation (from awareness to planning)

and implementation (practicing until it is part of routine)

Damanpour and Wischnevsy, 2006

Methodology

• Research design proposal, applying process perspective to study OI

Inductive, longitudinal, field-based case study, well suited for

developing Grounded Theory

Eisenhardt, 1989; Glaser and Strauss, 1967

– It pays attention to the reality and evolution of the field study

– Without previous hypothesis

– Looking for results along the collection and systematic analysis

of field data

– Useful for feedback processes driving change dynamics over

time Tripsas, 2009

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Introduction to Grounded Theory (GT)

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Purpose

• Develop theories about barely known phemomenon

• Based on data directly collected on the field

Difference From mere description to theory

Focus on Behaviours - the engine of the meanings

Use on business

research Elusive and misunderstood

Features

• NO deep initial literature review

• NO hypotheses

• NO linearity: constant comparative cycle

• Fieldwork and data analysis: in paralell

• Ends with saturation, confirmability & final theory

Developing GT on organizational innovation research

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Field settings:

- Basque Industrial SME

- Theoretical sampling

Data sources applied

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2nd round

Analytical process developed

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Organization of incidents - screenshot

Partially covered

for confidentiality

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Tag cloud example – “internal dynamics” cathegory

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Timeline example

Analytical process developed

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Initial theory from Ennera case (1/2)

• Evolution from a project based workplace organization (until 2010)

to a functionally departamentalized model (2011)

– Further vertical decision-making process

– Partially developed due to deeply rooted horizontal

communication processes and business practices

– New to the organization innovation

• Main challenge arising in 2012:

– Formalizing business practices

– While keeping informal and family-like organizational culture

– Self-generated methods combined with commonly known ones

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Initial theory from Ennera case (2/2)

• Main driver for OI process - their strategic goal:

– Gain a competitive advantage in the renewable energy market

– offering a technology-based value-added servie

– mainly differentiated by their particular approach to market:

honest, transparent and coherent

• It is the reference to build their own organizational method

– No defined idea of a model to deploy

– No plans, no implementation steps

– OI process based on a sequence of actions and decisions

evolving on a trial and error dynamic

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Process in progress

Final theory – initial results

It emerges when theoretical explanation is found to the first theory

• Ennera’s OI is interpreted afterwards as the implementation of new

methods in

– Its business practices and workplace organization (interrelated)

– Currently with some hints about innovation on external relations

– New to the firm, with potential to be new to the market

– Driven by a broad strategic goal

• Ennera is developing a OI generation process combining self-

generated ideas with generally known ones, as part of a creative

process towards a previously unknown organizational model

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Limitations

• Work in progress

• Researcher as the main reseach tool – risk of bias:

– Immersion is a must to understand meanings in the field

– Requires data triangulation, rigour on field notes and own

consciousness

– To reach confirmability

Kawulich, 2005; Peñaloza&Cayla, 2006

• Applicability will be based on

– facilitating transference to other contexts

– opening future research tracks

Williams et al., 2005

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Conclusions

• Oslo Manual’s definition is relevant to clarify OI, but:

– Not enough differentiation from Organizational Change

– “New to the firm” degree fits

– But diffusion potential might be limited

– Strategic goal might be broad and not organizationally defining

• Generation / adoption innovation process distinction

– Is also applied to non-technological innovation

– Can help understanding better OI phenomenon

• Grounded Theory is a suitable methodology for studying OI

– Can be applicable to future research on management or

innovation processes

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Thank you!

Maria Larraza Malkorra

Blog: www.marialarraza.com

E-mail: maria.larraza@deusto.es

Faculty of Social and Human Sciences – University of Deusto