When it comes to product innovation, what is so bad about bureaucracy?

Abstract

In theory, bureaucracy is said to be “bad” for innovation. Yet large bureaucratic organizations often need to be both adept at innovation and capable of ongoing routinized production. Unfortunately, little is actually known about how bureaucracy hinders innovation, since research on the relationship of structural characteristics of organization and innovation is ambiguous. This study attempts to illuminate the specific relationship between bureaucracy and innovation so as to permit progress beyond the innovation-bureaucracy stalemate. Building on an interpretive rather than structure perspective, we analyzed 134 people's experiences with product innovation in 15 large bureaucracies. We found four patterns of bureaucratic thinking and acting that systematically inhibited effective action in defining, organizing, evaluating, and staffing the innovation effort. These patterns are described and illustrated at some length. Then, drawing on Weber's original theory of bureaucracy and other classics of innovation, we theorize that it is an interpretive system of instrumental rationality, not only a bureaucratic structure, that creates and maintains these patterns. From this insight we speculate on how large bureaucracies can become more innovative without losing their efficiency.