How Do Resource Structuring and Strategic Flexibility Interact to Shape Radical Innovation?

Abstract

As high resource consumption and high uncertainty are two of the most critical challenges to radical innovation, it is imperative to adopt resource structuring for an active management of resource portfolios, and also to adopt strategic flexibility for active management of contextual uncertainties, especially for firms in the emerging economies characterized by serious resource deficiency and high contextual uncertainty. Though firms engaging in resource structuring and strategic flexibility separately could foster radical innovation, the interaction effect of resource structuring and strategic flexibility could be complementary or substitutive, and the effective utilization of these two organizational dimensions as a joint force should be well aligned to achieve scientific breakthroughs. Specifically, this study explores how two different types of strategic flexibility (i.e., resource flexibility and coordination flexibility) as special capabilities interact with two different types of resource structuring (i.e., resource acquisition and resource accumulation) as special mechanisms to shape radical innovation under high uncertainty. With a sample of 508 Chinese firms, our results show that the specific effects of resource acquisition and resource accumulation on radical innovation are contingent upon resource flexibility and coordination flexibility in two contrasting patterns. Specifically, a firm with high resource flexibility tends to foster radical innovation under high uncertainty by interacting with resource accumulation, rather than with resource acquisition; in contrast, a firm with high coordination flexibility is likely to foster radical innovation under high uncertainty together with resource acquisition, rather than with resource accumulation. The theoretical and practical implications of the above two contrasting patterns are also discussed.

Organizing for Radical Innovation: Exploring Novel Insights

“…Theoretical perspectives range from diversity theories (Mohammadi, Brostrom, and Franzoni, ) to human resource management (Aagaard, ), institutional theories (Radaelli, Currie, Frattini, and Lettieri, ), open innovation (Kamuriwo, Baden‐Fuller, and Zhang, ), organizational identity and managerial identity‐dissemination discourse (Perra, Sidhu, and Volberda, ), resource management (Li, Li, Wang, and Ma, ), and social network theories (Dong, McCarthy, and Schoenmakers, ). The proposed methodologies encompass both case studies (Aagaard, ; Radaelli et al, ) and quantitative analyzes, with the latter including panel data (Kamuriwo et al, ), network analyses (Dong et al, ), and cross‐sectional specifications (Li et al, ; Mohammadi et al, ; Perra et al, ). Six out of seven papers focus on a single national context, namely China (Li et al, ), Italy (Radaelli et al, ), the Netherlands (Perra et al, ), Sweden (Mohammadi et al, ), the United Kingdom (Kamuriwo et al, ), and the United States (Dong et al, ).…”

“…The proposed methodologies encompass both case studies (Aagaard, ; Radaelli et al, ) and quantitative analyzes, with the latter including panel data (Kamuriwo et al, ), network analyses (Dong et al, ), and cross‐sectional specifications (Li et al, ; Mohammadi et al, ; Perra et al, ). Six out of seven papers focus on a single national context, namely China (Li et al, ), Italy (Radaelli et al, ), the Netherlands (Perra et al, ), Sweden (Mohammadi et al, ), the United Kingdom (Kamuriwo et al, ), and the United States (Dong et al, ). Aagaard () presents a case study of a Danish firm and seven validation studies of firms from four countries—Denmark, Belgium, Switzerland and the United States.…”

“…The fourth paper, by Li et al (), moves the analysis from practices to processes of resource management within firms. In this framework, the authors analyze the interplay and associated impact on the radical innovation of strategic flexibility and resource structuring .…”

“…Often, scientists must both develop their resources internally, thus engaging in resource accumulating (for instance, by designing and building their own instruments and equipment, e.g., Franzoni, ), and leveraging external resources, thus engaging in resource acquiring (as it happens in economic and management research in the case of the acquisition of large commercial databases like Orbis or VentureXpert). Therefore, in the spirit of the results of Li et al (), we encourage firms to open a dialog with scientists to exchange ideas and best practices on how to match strategic flexibility with resource accumulating and acquiring to structure the resource portfolio for radical innovation.…”

“…Overall, we learn that the key challenge in organizing for radical innovation consists of designing organizational arrangements that favor the creation and original recombination of new knowledge. To this end, firms can leverage workforce diversity (Mohammadi et al, ), human resource practices (Aagaard, ) and professional practices (Radaelli et al, ), resource management processes (Li et al, ), open innovation strategies (Kamuriwo et al, ), organizational identity (Perra et al, ), and alliance networks (Dong et al, ).…”