Impacts of regulatory focus and institutions on innovation

Abstract

Purpose Many factors influence entrepreneurs, some of which influence the level of innovation (i.e. innovative or imitative) of new products or services pursued. The purpose of this paper is to explore the impact of the psychological motivations of the entrepreneurs and their institutional setting on the innovativeness of the new venture they pursue. Through this exploration, we can gain a better understanding of how innovative new ventures still occur in varying institutional environments. Design/methodology/approach In order to deliver the authors’ propositions as they pertain to innovation, the authors review the literature on entrepreneurs’ default regulatory focus (i.e. promotion or prevention seeking) and the strength of the institutions in which they are operating. Findings The authors theorize that promotion focus enhances innovativeness of ventures while prevention focus enhances imitativeness of ventures. The authors also provide a conceptual framework for the interplay among institutions and regulatory focus and provide a typology for how these varying combinations impact innovativeness or imitativeness of venture type. Originality/value In this study, the authors discuss and unpack the entrepreneurial mindset in order to bridge gaps between institutions and cognitive motivations of entrepreneurs as they pertain to innovativeness of venture type. By synthesizing several areas of research, the authors shed light on entrepreneurs’ innovativeness by proposing how these factors work together in determining whether an entrepreneur’s venture is more or less innovative based on regulatory disposition and in different institutional settings.

The influence of institutional and conductive aspects on entrepreneurial innovation

“…Chadee and Roxas (2013) suggested that the current state of formal institutions in the form of regulatory quality, rule of law and corruption inhibit firm innovation and performance in Russia. Cowden and Bendickson (2018) noted that different institutional environments are interconnected with the regulative, cognitive and normative behavior of individuals, where national institutions may influence the relationship between the cognitive motivations of entrepreneurs and the innovativeness of new ventures.…”

Leader Inclusiveness and Taking Charge: The Role of Thriving at Work and Regulatory Focus

“…Individuals operating primarily with promotion focus are concerned about accomplishments, hopes, and aspirations and pursue an “ideal self” (Kark and Van Dijk, 2007). They are likely to exhibit “exploratory” behaviors (Förster et al, 2004) and to be more open to creativity and innovation (Cowden and Bendickson, 2018). Neubert et al (2008) found a positive relationship between promotion focus and helping and creative behaviors, while Lanaj et al (2012) proposed that promotion focus was associated with innovation.…”

Institutional incentives and pressures in Chinese manufacturing firms’ innovation

“…Meanwhile, China has also greatly strengthened its innovation-related regulations, including intellectual property rights (IPR) legislations, technical and product standards, and environmental regulations (Mangelsdorf, 2011;Zhao and Sun, 2016;Peng et al, 2017). In such a dynamic institutional environment, Chinese firms' innovation is shaped not only by the firm-specific resources, but also by the above institutional conditions and transitions (Peng et al, 2009;Cowden and Bendickson, 2018).…”