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This chapter reports on the results of extensive research into the role of performance measurement and management control systems in increasing both incremental and breakthrough innovation in large organizations. It includes both business model and technology innovation and is based on extensive large sample survey research and field research with leading global corporations.

The research extends the common exploration/exploitation discussion and describes an “innovation paradox” where the factors that have led to many companies’ successes in achieving organizational excellence and profitability through cost savings and various incremental improvements are the same factors that have inhibited them from developing needed breakthroughs. The chapter also discusses how achieving breakthrough innovation is significantly different in top down versus bottom up organizational designs and systems. The critical role of management control and performance measurement systems is described.

The research provides a new model to achieve breakthrough innovation in large, established corporations. It provides a description and the details of a process – “the Startup Corporation” – that can be implemented in corporations to bring together the benefits of small startups with the benefits of large established companies that have significant resources, networks, and systems to achieve success. By combining these strengths, large established companies can succeed in achieving breakthroughs where they have often failed.

This research over two decades has provided new insights on the differences in the needed management control and performance measurement systems to succeed in breakthrough innovation in addition to the incremental innovation that is so common in large organizations.

This study aims to establish a reliable index to identify interdisciplinary breakthrough innovation effectively. We constructed a new index, the D_Div index, for this purpose.

The D_Div index incorporates the degree of interdisciplinarity in the breakthrough index. To validate the index, a data set combining the publication records and citations of Nobel Prize laureates was divided into experimental and control groups. The validation methods included sensitivity analysis, correlation analysis and effectiveness analysis.

The sensitivity analysis demonstrated the D_Div index’s ability to differentiate interdisciplinary breakthrough papers from various categories of papers. This index not only retains the strengths of the existing index in identifying breakthrough innovation but also captures interdisciplinary characteristics. The correlation analysis revealed a significant correlation (correlation coefficient = 0.555) between the interdisciplinary attributes of scientific research and the occurrence of breakthrough innovation. The effectiveness analysis showed that the D_Div index reached the highest prediction accuracy of 0.8. Furthermore, the D_Div index outperforms the traditional DI index in terms of accuracy when it comes to identifying interdisciplinary breakthrough innovation.

This study proposed a practical and effective index that combines interdisciplinary and disruptive dimensions for detecting interdisciplinary breakthrough innovation. The identification and measurement of interdisciplinary breakthrough innovation play a crucial role in facilitating the integration of multidisciplinary knowledge, thereby accelerating the scientific breakthrough process.

This study aims to propose a combined effect framework to explore the relationship between research and development (R&D) team networks, knowledge diversity and breakthrough technological innovation. In contrast to conventional linear net effects, the article explores three possible types of team configuration within enterprises and their breakthrough innovation-driving mechanisms based on machine learning methods.

Based on the patent application data of 2,337 Chinese companies in the biopharmaceutical manufacturing industry to construct the R&D team network, the study uses the K-Means method to explore the configuration types of R&D teams with the principle of greatest intergroup differences. Further, a decision tree model (DT) is utilized to excavate the conditional combined relationships between diverse team network configuration factors, knowledge diversity and breakthrough innovation. The network driving mechanism of corporate breakthrough innovation is analyzed from the perspective of team configurations.

It has been discerned that in the biopharmaceutical manufacturing industry, there exist three main types of enterprise R&D team configurations: tight collaboration, knowledge expansion and scale orientation, which reflect the three resource investment preferences of enterprises in technological innovation, network relationships, knowledge resources and human capital. The results highlight both the crowding-out effects and complementary effects between knowledge diversity and team network characteristics in tight collaborative teams. Low knowledge diversity and high team structure holes (SHs) are found to be the optimal team configuration conditions for breakthrough innovation in knowledge-expanding and scale-oriented teams.

Previous studies have mainly focused on the relationship between the external collaboration network and corporate innovation. Moreover, traditional regression methods mainly describe the linear net effects between variables, neglecting that technological breakthroughs are a comprehensive concept that requires the combined action of multiple factors. To address the gap, this article proposes a combination effect framework between R&D teams and enterprise breakthrough innovation, further improving social network theory and expanding the applicability of data mining methods in the field of innovation management.

To adapt to the rapidly changing market environment, firms must constantly adjust and change their knowledge base to develop new technologies. The purpose of this paper is to analyze the improvement path of firms’ breakthrough innovation from the perspective of knowledge recombination in the context of dynamic change in the knowledge base. By analyzing the influencing mechanism of environmental dynamism on the relationship between the two, this paper provides a theoretical foundation for managers to make knowledge recombination decisions under a dynamic external environment while further enriching the firm’s innovation achievements.

Using data from 220 manufacturing firms listed on the Shanghai and Shenzhen A-share stock from 2010 to 2018, an extensive panel data set was constructed to investigate the effect of knowledge recombination, which was divided into recombination creation and recombination reuse, on firms’ breakthrough innovation. In addition, the authors differentiated environmental dynamism as market dynamism and technological dynamism and then examined its moderating role in the above relationships.

The research results show that various recombination behaviors of knowledge elements have a differentiated effect on firms’ breakthrough innovation presented as follows: Knowledge recombination creation is significantly positively correlated with firms’ breakthrough innovation, while knowledge recombination reuse is significantly negatively correlated with firms’ breakthrough innovation. In addition, environmental dynamism has a considerable moderating effect between knowledge recombination and firms’ breakthrough innovation further, emphasizing that the moderating effect on different types of knowledge recombination behaviors is significantly distinct.

First, given that this study refers to several Chinese noted databases to collect second-hand data for empirical analysis, future research could use first-hand data by collecting questionnaire survey and interview to provide a more practical and detailed research conclusion. Second, the authors focused on the contextual variable to explore the moderating role of environmental dynamism on the relationship between knowledge recombination and breakthrough innovation. Nevertheless, the indirect effects of other internal factors were not discussed. The authors advocate future studies to involve other moderators from employee social and phycological perspectives, such as trust in colleagues in the proposed theoretical models in this study.

This study is conducive for managers to attach great attention to knowledge management practices in the firm and to understand the critical role of knowledge recombination in affecting innovation performance under dynamic environmental changes. Moreover, this study provides practical guidance and serves as a reference for firms to strengthen their knowledge recombination ability as full utilization of existing knowledge elements and exploration of new knowledge values.

Primarily, from the perspective of dynamic changes in the knowledge base, this paper explores how the knowledge recombination behaviors affect firms’ breakthrough innovation, thereby enriching and extending the relationship theory between knowledge recombination capabilities and breakthrough innovation, while new and valuable ideas are provided in the study of issues related to the firms’ breakthrough innovation; Moreover, this study analyzes the moderating effects of diverse types of environmental dynamism on the relationship between knowledge recombination and firms’ breakthrough innovation from a multi-dimensional perspective proposing that the moderating effects of environmental dynamism on different knowledge recombination behaviors are distinct.

This paper aims to reveal how different types of events and top management teams' (TMTs’) cognitive frames affect the generation of breakthrough innovations.

Drawing on the event system theory and upper echelon theory, this study chose a Chinese manufacturing enterprise as the case firm and conducted an exploratory single-case study to unpack how breakthrough innovation generates over time.

By conducting the in-depth case analysis, the study revealed that firms do not produce breakthrough innovation in the catch-up stage and parallel-running stage but achieve it in the leading stage. It also indicated that when facing proactive events in the catch-up stage, TMTs often adopt a contracted lens, being manifested as consistency orientation, less elastic organizational identity and narrower competitive boundaries. In addition, they tend to adopt a contracted lens when facing reactive and proactive events in the parallel-running stage. In the face of reactive and proactive events in the leading stage, they are more inclined to adopt an expanded lens, being manifested as a coexistence orientation, more elastic organizational identity and wider competitive boundaries.

First, by untangling how TMT's cognitive frame functions in breakthrough innovations, this paper provides a micro-foundation for producing breakthrough innovations and deepens the understanding of upper echelon theory by considering the cognitive dimension of TMTs. Second, by teasing out several typical events experienced by the firm, this paper is the first attempt to reveal how events affect the generation of breakthrough innovation. Third, the work extends the application of the event system theory in technological innovation. It also provides insightful implications for promoting breakthrough innovations by considering the role of proactive and reactive events a firm experiences and TMT's perceptions.

This study aims to clarify the effect of team effort allocation between knowledge exploration and exploitation on the generation of extremely good or poor innovations. The influence of previous collaborative experience among team members on the effect of team effort allocation is also investigated to understand the relationship between team members’ collaboration networks and knowledge learning.

This study uses data of all patents granted by the US Patent and Trademark Office between 1984 and 2010. The inventors involved in a patent are regarded as members of the focal team. Logistic regression is used to analyze the data.

Allocating greater effort to exploration than to exploitation is beneficial to achieving breakthrough innovations despite the risk of generating particularly poor innovations. This benefit increases with collaborative experience among team members. Placing an equal emphasis on knowledge exploration and exploitation is not particularly effective in achieving breakthrough innovations; it is, however, the best strategy for avoiding particularly poor innovations.

This research not only provides valuable insights for research on innovation and knowledge management by studying the team effort allocation strategy used to achieve breakthroughs and avoid particularly poor innovations but also represents an advancement in bridging two streams of research – knowledge learning and social networks – by highlighting the influence of the team members’ collaborative networks on the effect of team effort allocation between knowledge exploration and exploitation.

The purpose of this paper is to focus on the influences of dynamic capability on breakthrough innovation and explores the essential mechanisms related to such influence. The impact of breakthrough innovation on organizational performance is also examined in conjunction with the manufacturing industry samples in China.

This paper follows an empirical design. Data are collected from a survey administered to manufacturing samples in China. Regression analysis is used to test the hypothesis.

Results show that the positive impact of breakthrough innovation on organization performance is verified. Technological breakthrough innovation affects both the organization’s financial performance and growth performance in a linear and positive way, while market breakthrough innovation affects organization performance positively with marginal increments.

This paper uses data of manufacturing industry of China, hence, an extended survey in depth and width is worthy of future investigation. In addition, more unique predisposing factors on breakthrough innovation should be considered in the context of China.

The research enriches the understanding of how the dynamic capability affects the enterprise’s breakthrough innovation, which helps entrepreneurs understand how to strategize to build dynamic capability during breakthrough innovation decisions and implementations.

Dynamic capability is uniquely viewed as a multi-dimensional concept from a perspective of modularity, while breakthrough innovation is composed of two constructs. It not only enriches the understanding of how dynamic capability affects breakthrough innovation but also discovers the non-linear impact of breakthrough innovation on enterprise’s organizational performance in the context of China’s manufacturing industry.

Strategy scholars have long argued that breakthrough innovation is generated by recombining knowledge from distant domains. Even if firms have the ability to access and absorb knowledge from distant domains, however, they may fail to pay attention to such knowledge because it is seemingly irrelevant to their tasks. We draw attention to this problem of knowledge relevance and develop a theoretical model to illuminate how ideas from seemingly irrelevant (i.e., peripheral) domains can generate breakthrough innovation through the cognitive process of analogical reasoning, as well as the conditions under which this is more likely to occur. We situate our theoretical model in the context of teams in order to develop insight into the microfoundations of knowledge recombination within firms. Our model reveals paradoxical requirements for teams that help to explain why breakthrough innovation is so difficult.

This study aims to examine the roles of dynamic innovation capabilities and open innovation activities in breakthrough innovation. Drawing from the absorptive capacity perspective, organizational inertia theory, and open innovation, the authors seek to argue that dynamic innovation capabilities have a curvilinear effect on breakthrough innovation that is moderated by open innovation activities.

A mail survey was sent to the top 1,000 firms in Taiwan, the target respondents being senior managers with experience in developing at least three successful breakthrough innovations in the past five years. A total of 218 usable questionnaires were collected, resulting in a respondent rate of 22.9 percent.

The findings support the argument that dynamic innovation capabilities have an inverted U‐shape relationship with breakthrough innovation. Meanwhile, open innovation activities strengthen the positive effects of dynamic innovation capabilities on breakthrough innovation.

The findings enrich the existing literature by proposing and confirming empirically that open innovation activities help firms with effective coordination of dynamic innovation capabilities.

Managers must be aware of the limitations of their existing dynamic innovation capabilities in terms of developing breakthrough innovation.

This study not only resolves the conflicting views about the relationship between dynamic capabilities and innovation but also adds to the existing literature that indicates the failure of leading firms in the face of rapid environmental change.

Drawing on the upper echelons theory, this study focuses on how top management team (TMT) heterogeneity affects breakthrough innovations and examines how strategic decision-making logic (including causation and effectuation) moderates the relationship between TMT heterogeneity and breakthrough innovation.

By conducting an empirical test of 227 sample firms in China, the authors applied linear hierarchical regression analysis to test the hypotheses on the TMT heterogeneityinnovation relationship and the moderating roles of causation and effectuation.

The empirical tests show that TMT heterogeneity positively affects breakthrough innovation, and both causation and effectuation positively moderate the positive relationship between TMT heterogeneity and breakthrough innovation. In addition, effectuation has a stronger moderating effect on the positive correlation between TMT heterogeneity and breakthrough innovation than causation.

This study extends the upper echelons theory to explain how the characteristics of TMTs affect firm innovation. Specifically, the authors explore the TMT heterogeneity–breakthrough innovation relationship from the perspectives of information processing and core competence and reveal the boundary condition of strategic decision-making logic in the correlation between TMT heterogeneity and breakthrough innovation. In this vein, the authors contribute to the literature by untangling the internal mechanisms between TMT heterogeneity and breakthrough innovation and extending the discussion on effectuation theory from the entrepreneurship domain to the innovation field. Furthermore, the research findings can provide helpful implications for TMTs to manage breakthrough innovation effectively.