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An intellectual capital-based differentiation theory of innovation practice

John Dumay (Accounting Department, University of Sydney Business School, Sydney, New South Wales, Australia)
Jim Rooney (Accounting Department, University of Sydney Business School, Sydney, New South Wales, Australia)
Lisa Marini (Accounting Department, University of Sydney Business School, Sydney, New South Wales, Australia)

Journal of Intellectual Capital

ISSN: 1469-1930

Article publication date: 21 October 2013

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Abstract

Purpose

The purpose of this paper is to respond to calls to research recognising impediments to innovation practice. The paper argues that decision-making preferences by risk-averse managers are a key impediment to the organisational support required for the commercialisation of new ideas, by exploring the relationship between forms of intellectual capital (IC) and innovation. As a result, categories are derived that contrast with the current grand theory that IC drives innovative practices.

Design/methodology/approach

The paper critically examines cross-sectional empirical data gathered through semi-structured interviews with 27 Australian executive managers from leading Australian companies and the public sector. These interviews elicited narratives about successful and unsuccessful innovations where interviewees had significant involvement in the outcome. In all, 54 narratives of innovation from executive managers – 27 successes and 27 failures, were analysed using the repertory grid technique to unearth patterns about the process of innovation, especially in relation to the stability of the business environment and the need for innovation.

Findings

The paper finds that successful innovation in a context identified as demonstrating risk-averse decision-making behaviours requires different management approaches, depending on whether the innovation is radical, evolutionary or incremental. The paper discovers 12 different factors contributing to innovation processes and identifies those that are more likely to contribute to the success of innovative endeavours. From this the current grand theory that IC drives innovative practices is challenged by developing an IC-based differentiation theory of innovation practice.

Research limitations/implications

As always, the observations and conclusions reached are limited to the 27 interviews and the Australian context. Further, findings are based on the authors’ objective analysis. As with any qualitative study the authors also caution about generalising the findings, and as with any theory it should be used to develop insights into actions, rather than prescribing them.

Practical implications

For educators it highlights the need to teach students to critique innovation rather than accepting that all innovation is beneficial. For researchers it shows they must avoid success bias by investigating both successful and failed innovations, developing differentiation theories of innovation practice. The findings highlight how senior managers responsible for enabling and resourcing innovation need to develop skills for identifying the innovation type enabled, matching it to an appropriate strategic approach. Finally, for policy makers it shows how different forms of successful innovation require different approaches, and each can be encouraged, developed and enabled differently.

Originality/value

The paper is novel because it addresses the interaction and complexities of the different factors that enable successful innovation and possibly contribute to innovation failures, and the types of innovation relevant to each context. This approach is in contrast to the contemporary innovation literature, which tends to focus on successful radical innovation. As a result, the paper offers a more holistic view of the diverse and interrelated factors that impact innovation success and/or failure.

Keywords

Acknowledgements

Funding for this research was provided by the University of Sydney and KPMG. The authors Dr Robert Kay and Dr Chris Goldspink from Incept Labs Pty for their research support and collaboration. They also thank Fiona Crawford from the Editorial Collective for her invaluable editorial contributions.

Citation

Dumay, J., Rooney, J. and Marini, L. (2013), "An intellectual capital-based differentiation theory of innovation practice", Journal of Intellectual Capital, Vol. 14 No. 4, pp. 608-633. https://doi.org/10.1108/JIC-02-2013-0024

Publisher

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Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited