How firms organize for successful innovation in a hostile environment

Abstract

Managers in a business environment marked by rapid technological change face major challenges when making strategic decisions. A risk-averse, conservative strategy may be a safe route, but might lead to missing marketplace opportunities. This paper investigates whether a hostile business environment adversely affects either a firm's rate of technological innovation or its rate of success with new product launches. It also examines what successful innovating firms do, in terms of strategic posture and organizational structure, to adapt to hostile conditions. A model depicting relationships between environmental conditions, firm responses, innovation rates, and new product success was constructed and tested in an empirical study of 142 U.S. firms involved in technological innovation. The final section discusses managerial implications of the findings.