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Leveraging Resistance to Change and the Skunk Works Model of Innovation

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Author Info
Andrea Fosfuri (Universidad Carlos III de Madrid)
Thomas Rønde (Department of Economics, University of Copenhagen)
Abstract

We study a situation in which an R&D department promotes the introduction of an innovation that results in costly re-adjustments for a production department. In response, 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. 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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File URL: http://www.econ.ku.dk/CIE/Discussion%20Papers/2007/2007-10.pdf
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Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 2007-10.

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Length: 22 pages
Date of creation: Apr 2005
Date of revision: Jun 2007
Handle: RePEc:kud:kuieci:2007-10

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Related research
Keywords: resistance to change; innovation; skunk works model; contest;

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Find related papers by JEL classification:
L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation
M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D

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