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Leveraging resistance to change and the skunk works model of innovation

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  • Fosfuri, Andrea
  • Rønde, Thomas

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.

Suggested Citation

  • Fosfuri, Andrea & Rønde, Thomas, 2009. "Leveraging resistance to change and the skunk works model of innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 274-289, October.
  • Handle: RePEc:eee:jeborg:v:72:y:2009:i:1:p:274-289
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    Cited by:

    1. 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.
    2. Geiger, Susi & Finch, John, 2016. "Making incremental innovation tradable in industrial service settings," Journal of Business Research, Elsevier, vol. 69(7), pages 2463-2470.
    3. 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.

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