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Abstract

We study a situation in which an R&D department promotes the introduction of an innovation that results in costly re-adjustments for production workers. In response, the production department tries to resist change by improving the existing technology. Resistance to change triggers competition between departments, which, in turn, spurs effort. We show that firms balancing the strengths of the two departments perform better. 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. Several implications for managing resistance to change and for the optimal design of R&D activities are derived.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 72 (2009)
Issue (Month): 1 (October)
Pages: 274-289

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Handle: RePEc:eee:jeborg:v:72:y:2009:i:1:p:274-289

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Resistance to change Innovation Skunk works model Contest;

References

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Cited by:

1. You-Na Lee & John P. Walsh, 2012. "Intra-organizational integration and innovation: organizational structure, environmental contingency and R&D performance," ICER Working Papers 20-2011, ICER - International Centre for Economic Research.
2. Ruckes, Martin & Rønde, Thomas, 2010. "Dynamic incentives in organizations: Success and inertia," Working Paper Series in Economics 7, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.

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