The governance of innovation centers in large established companies

Abstract

This paper presents a model for the governance of radical innovation (RI) efforts within the firm. A longitudinal study of 12 large established companies committed to develop and institutionalize a radical innovation capability are used to inform our work. Thus the firm, rather than the RI project, is the unit of analysis for this work. We draw on Agency Theory, Firm Level Governance, Stewardship Theory and Stakeholder Theory as well to enrich the model. We find that none of these theoretical frames adequately describes the issues faced by companies as they build governance systems to oversee high risk, high uncertainty innovation portfolios. A series of propositions is offered based on the data analysis and extant literature that address board composition, decision style and decision processes that, we believe, enhance a company's ability to generate and commercialize radical innovations.