Economics and Management of Innovation Seminar

Seminar with
Thomas Rønde, Department of Economics, University of Copenhagen.

Leveraging Resistance to Change and the Skunk Works Model of Innovation.

Joint with
Andrea Fosfuri, Universidad Carlos III de Madrid.

Abstract:

We study a situation in which an R&D department promotes the introduction of an innovation. Since the introduction would result in costly readjustments or production workers, the production department tries to resist change by improving the existing technology. We show that firms balancing the strengths of the two departments perform better. This principle is employed to derive several implications concerning the hiring of talents, monetary incentives, and technology investment policies. As a negative effect, resistance to change might distort the R&D department's effort away from radical innovations. The firm can solve this problem by implementing the so-called "skunk works model" of innovation where the R&D department is isolated from the rest of the organization.

This seminar is part of the IVS/CBS Economics and Management of Innovation Seminar Series organized by Keld Laursen, Serden Özcan, Finn Valentin and Mark Lorenzen. For more information on this seminar series, please contact us.