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Evaluating the New: The Contingent Value of a Pro-Innovation Bias

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  • Oliver Baumann
  • Dirk Martignoni

Abstract

It is a central tenet in the literature on organizational change that firms need to explore novel courses of action in order to adapt and survive. Should firms thus exhibit a “pro-innovation bias” when evaluating novel decision alternatives? Or should firms rather assess new opportunities as objectively as possible? Our analysis of a simulation model suggests that a pro-innovation bias can have exploration-enhancing effects that increase long-run performance in complex and stable environments, but can also decrease performance substantially if the bias becomes too pronounced. However, under most other conditions, an unbiased, objective evaluation of novel opportunities is most effective. We also identify a set of contingency factors that strongly affect the value of a pro-innovation bias, which may explain why it is that we see so few firms with such a bias.

Suggested Citation

  • Oliver Baumann & Dirk Martignoni, 2011. "Evaluating the New: The Contingent Value of a Pro-Innovation Bias," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 63(4), pages 393-415, October.
  • Handle: RePEc:sbr:abstra:v:63:y:2011:i:4:p:393-415
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    Cited by:

    1. Friederike Wall, 2016. "Agent-based modeling in managerial science: an illustrative survey and study," Review of Managerial Science, Springer, vol. 10(1), pages 135-193, January.
    2. Leitner, Stephan & Rausch, Alexandra & Behrens, Doris A., 2017. "Distributed investment decisions and forecasting errors: An analysis based on a multi-agent simulation model," European Journal of Operational Research, Elsevier, vol. 258(1), pages 279-294.
    3. Friederike Wall, 2016. "Agent-based modeling in managerial science: an illustrative survey and study," Review of Managerial Science, Springer, vol. 10(1), pages 135-193, January.
    4. Stephan Leitner & Friederike Wall, 2015. "Simulation-based research in management accounting and control: an illustrative overview," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 26(2), pages 105-129, August.

    More about this item

    Keywords

    Innovation; Organizational Decision Making; Organizational Exploration and Adaptation; Organizational Search;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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