Prof. Dr. Christina Raasch

Abstract

This study investigates the sources of disruptive innovation. The disruptive innovation literature suggests that these do not originate from existing customers, in contrast to what is predicted by the user innovation literature. We compile a unique content-analytical dataset based on 60 innovations identified as disruptive by the disruptive innovation literature. Using multinomial and binomial regression, we find that 43% of the sample disruptive innovations were originally developed by users. Disruptive innovations are more likely to originate from users (producers) if the environment has high turbulence in customer preferences (technology). Disruptive innovations that involve high functional (technological) novelty tend to be developed by users (producers). Users are also more likely to be the source of disruptive process innovations and to innovate in environments with weaker appropriability. Our article forges new links between the disruptive and the user innovation literatures, and offers guidance to managers on the likely source of disruptive threats.

Abstract

Research Summary



Companies are increasingly opening up decision-making, involving employees on all levels in distributed—and purportedly “hierarchy-free”—decision processes. We examine how hierarchy reaches into such “democratized” systems, arguing that it is a source of homophily that biases idea evaluation decisions. Using a data set from internal crowdfunding at one of the world's largest industrial manufacturers, we show that idea evaluators overvalue hierarchically similar others' ideas. Competition in the form of lateral closeness dampens this bias, whereas uncertainty in the form of novelty amplifies this bias. We contribute to the literatures on decision biases in centralized versus distributed innovation and on structural similarity as a driver of employee behaviors.

Managerial Summary



Many companies are starting to involve employees on all levels in strategic decisions, so as to curb hierarchical rigidities and integrate multiple perspectives. However, such distributed decision-making opens the door to new biases and, ultimately, suboptimal strategic decisions. In the context of internal crowdfunding at a large industrial manufacturer, we show that employees evaluate hierarchically similar others' ideas overly favorably. Thus, hierarchy is not just a source of rivalry, but also of identification, leading to favoritism among hierarchical peers. Further, employees are particularly likely to assess ideas based on hierarchical similarity rather than content if the ideas are novel and therefore hard to evaluate. We provide suggestions for the design of distributed decision-making systems.

Abstract

Recent studies have identified that employees can be lead users of their employing firm's products, and valuable sources of product innovation, residing within organizational boundaries. We extend this line of thought by recognizing that employees can be lead users with regard to internal work processes. We define work process-related lead userness (WPLU) as the extent to which employees experience unsatisfied process-related needs ahead of others, and expect high benefits from solutions to these needs. We hypothesize a positive association with user innovation in the workplace, evidenced by the development of tools, equipment, materials and methods. We test a moderated mediation model delineating how and when WPLU is related to user innovation within organizational boundaries. Drawing on survey data from 104 employees and 13 supervisors in a forensic services organization, we find that WPLU contributes to user innovation via engagement in innovative work behavior, especially when employees have higher self-efficacy (perceived capability to overcome obstacles) and lower job autonomy (situational constraints on the job).

Abstract

Innovation has traditionally been seen as the province of producers. However, theoretical and empirical research now shows that individual users—consumers—are also a major and increasingly important source of new product and service designs. In this paper, we build a microeconomic model of a market that incorporates demand-side innovation and competition. We explain the conditions under which firms find it beneficial to invest in supporting and harvesting users’ innovations, and we show that social welfare rises when firms utilize this source of innovation. Our modeling also indicates reasons for policy interventions with respect to a mixed user and producer innovation economy. From the social welfare perspective, as the share of innovating users in a market increases, profit-maximizing firms tend to switch “too late” from a focus on internal research and development to a strategy of also supporting and harvesting user innovations. Underlying this inefficiency are externalities that the producer cannot capture. Overall, our results explain when and how the proliferation of innovating users leads to a superior division of innovative labor involving complementary investments by users and producers, both benefitting producers and increasing social welfare.