The Emergence of Innovation Capability During Firms’ Early Stage: Cases from Indonesian Creative Social Enterprise

Abstract

The article is based on a literature review and empirical analysis of three creative social enterprises that have managed to build their innovation capability and have received numerous international awards for their sustainable impacts. The purpose of this article is to investigate how the "innovation capability perspective" of strategic management theory can be combined with "social innovation theory." By combining both perspectives, we propose a new way to understand and explain the emergence of innovation capability during the early stages of creative social enterprises, which neither "innovation capability" nor "social innovation perspective" can do on their own. The research used a qualitative exploratory study design with multiple case studies. In-depth interviews and literature studies were the data collection methods used in the study. Based on the reccurance patterns in the literature review, we propose creativity, leadership, strategy, knowledge management, and collaboration as determinant factors of innovation capability that are deeply needed for CSEs in their early stage. Through the results of in-depth interviews with 6 top management leaders in the creative social enterprises, it was possible to gain more descriptions that enriched the five determinant factors. We conclude that CSEs' innovation capability can emerge during the early stage if they have the motivation to be creative despite resources limitation, the presence of facilitating leaders supported by local champions, the alignment of business, technology, and social innovation strategy, the use of locality as a strategic asset in knowledge management, and the alignment of goals and expectations for fruitful collaboration. The study contributes to a better understanding of how innovation capability emerges during the early stages of creative social enterprises by combining both strategic management and social innovation theory.