The Innovator's License: A Latitude to Deviate from Category Norms

Abstract

Firms often look for ways to improve the return on investment they earn from costly innovation strategies. The authors investigate a previously unexplored benefit of innovation that occurs when a brand's reputation as a provider of valued new offerings allows it to earn innovation credit, a form of customer-based brand equity. Innovation credit provides brands with the license or latitude to use strategies that violate category norms without the penalty (in the form of impaired attitudes) that consumers are shown to levy on less innovative brands. Consistent with the proposed theoretical framework, three studies demonstrate that innovative brands are granted the license to employ nonnormative strategies without sanction. In addition to providing evidence regarding the inferential mechanism underlying this licensing effect, Study 3 shows that, under certain conditions, innovative brands not only escape the penalty associated with using atypical strategies but are actually rewarded for utilizing such approaches. The authors provide theoretical and managerial implications of these findings and suggestions for further research in this emerging area of innovation research.