Analyzing innovation adoption using a knowledge-based approach

Abstract

We propose a new typology of organizational innovation based on the integration of theories of organizational learning and theories of knowledge. The three dimensions that we use to construct our typology of innovations are: tacit–explicit, systemic–autonomous and simple–complex. We, then, analyze the impact of these different types of innovations on the method of sourcing, cost of implementation, and innovation effectiveness. We propose that as innovations become more tacit, systemic and complex, they tend to be more internally sourced, more costly to implement, and more effective. We test the hypotheses using innovations from the commercial banking industry. Data for this study were collected from multiple sources. The innovations were categorized into different types by a panel of experts. Data on method of sourcing, cost and effectiveness were collected from a sample of 101 banks. Our results showed that autonomous innovations were less likely to be internally sourced than systemic innovations; autonomous and complex innovations were more costly to implement than systemic and simple innovations. Explicit innovations were seen as more effective than implicit innovations. Implications for theory and practice are discussed.