Abstract
It is one of the key factors which cause “innovation dilemma” that managers prefer to support the sustaining innovation project. From the view of the manager’s innovation preference, the main propose of the paper is to study why it happened. The manager’s innovation preference will guide and motivate the staffs how to innovate, therefore it is appropriate to analyze it by using the principal agent theory. Conclusions can be got by establishing and analyzing a multi-task principal-agent model. First of all, the model basically explains why incumbent enterprises prefer adopting sustaining innovation and entrant enterprises are inclined to disruptive innovation project. Secondly, the selection rights of middle managers towards innovation projects determine the strategic direction of enterprises. Manager’s innovation preference is consistent with the innovation types of employees. At last, the paper suggests that incumbent enterprises should indeed establish self-organizations or spin-off organizations to better carry out disruptive business.
Highlights
When a manager faces multiple ideas, he definitely needs choose some of them and turn them into formal innovation projects
The model basically explains why incumbent enterprises prefer adopting sustaining innovation and entrant enterprises are inclined to disruptive innovation project
The selection rights of middle managers towards innovation projects determine the strategic direction of enterprises
Summary
When a manager faces multiple ideas, he definitely needs choose some of them and turn them into formal innovation projects. The distinguished features of diverse enterprises determine that the middle managers in incumbent enterprises prefer sustaining innovation projects, and the managers of entrant enterprises like disrup-. In the early stage, the produce of entrant enterprises could not meet the requests of core customers, they keep improving products performance and deprive market of incumbent enterprise. This is the key reason why some enterprises run well and allocate resources with profits maximization theory but still lost market competitiveness.
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