"Bet on the Race, not the Horse": Radical Innovation Capability in Established Corporations

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School of Business | Master's thesis
Ask about the availability of the thesis by sending email to the Aalto University Learning Centre oppimiskeskus@aalto.fi
International Design Business Management (IDBM)
International Design Business Management (IDBM)
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The purpose of this article is to leverage the recent advances in dynamic capability theory to increase our understanding of how established companies can initiate and develop sustainable capability for radical innovations (RI) and create new businesses to match market change. The study digs deeper into what effective RI looks like in established corporations and what capabilities their RI units have found necessary for finding new business opportunities. This thesis reports the results of qualitative research in 5 established, Finnish-based companies that operate globally in manufacturing industry. 7 managers of radical innovation programs were interviewed about their perceptions of RI and organization's capabilities to systematically produce RI. To build a systemic view of the RI, a new theoretical framework was build using Eisenhardt and Martin's (2000) reconceptualized framework of the dynamic capability view (DCV). Firstly, the findings suggest that in practice RI is more relative and subjective concept than the theoretical definitions imply and thus difficult to identify in real-life context. Secondly, the study found a strong theoretical linkage and explanatory power between the reconceptualized DCV and RI. The theories were linked through 1) simplicity of routines 2) explorative knowledge-creation and 3) unpredictability outcomes. Thirdly, the necessary components of organizational RI capability were identified and described here. The study found that the components clustered around the purposes for creating a separate RI unit in the first place. The three purposes for the separate RI unit were finding new business opportunities, improving 'intrapreneurial' culture and providing an agile decision-making process. The study clarifies the vague concept and methodology to identify RI. Furthermore, linking DCV and radical innovation offers much-needed systemic view into RI capability management. In the process the study offers an indication how the two conceptually separated DCV views could be merged back together. The study also provides much needed empirical evidence on what dynamic RI capabilities look like in practice and how they link to one- another creating organizational RI capability. This improves our understanding of organizational adaptation on both theoretical and empirical level, and shows interesting opportunities to further research the applicability of the two DCV concepts into the field of innovation studies.
radical innovation, strategic management, dynamic capabilities, DCV, organizational theory, organizational adaptation, competitive advantage, ambidextrous organization
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