Vlas, C is ina O.; De Góes, B uno Ba e o; Vlas, Radu E.; See, Eugene
A icle
Compe ing in inno a ion-in ensi e en i onmen s: The ole
o so powe , lea ning, and ceo heu is ics
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Compe ing in inno a ion-in ensi e en i onmen s: The ole o so powe , lea ning, and ceo
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Ci a ion: Vlas, C is ina O., B uno
Ba e o de Góes, Radu E. Vlas, and
Eugene See. 2024. Compe ing in
Inno a ion-In ensi e En i onmen s:
The Role o So Powe , Lea ning, and
CEO Heu is ics. Adminis a i e
Sciences 14: 169. h ps://doi.o g/
10.3390/admsci14080169
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adminis a i e
sciences
A icle
Compe ing in Inno a ion-In ensi e En i onmen s: The Role o
So Powe , Lea ning, and CEO Heu is ics
C is ina O. Vlas 1,* , B uno Ba e o de Góes 1, Radu E. Vlas 2and Eugene See 3
1
Managemen Depa men , Uni e si y o New Ha en, Wes Ha en, CT 06516, USA; [email p o ec ed]
2Managemen In o ma ion Sys ems Depa men , Cen al Connec icu S a e Uni e si y,
New B i ain, CT 06050, USA; [email p o ec ed]
3Managemen and Decision Sciences Depa men , Coas al Ca olina Uni e si y, Conway, SC 29528, USA;
[email p o ec ed]
*Co espondence: [email p o ec ed]
Abs ac : We s a by explo ing how he in e play o so powe and lea ning le e s helps i ms
add ess compe i i e unce ain y in inno a ion-in ensi e en i onmen s (IIEs). We hen heo ize ha
i ms’ mo i a ion o pu sue a speci ic combina ion o so powe and lea ning ac ics in IIEs is shaped
by CEO egula o y ocus. The analysis o a panel o IIE i ms suppo s ou heo izing and e eals
ha accoun ing o CEO egula o y ocus is elemen al o he unde s anding o i ms’ pe o mance
he e ogenei y in such en i onmen s. We conclude ha a pe spec i e ocused on a combina ion o so
powe and lea ning ac ics is be e i ed o explain i ms’ pe o mance in en i onmen s plagued by
ex eme unce ain y compa ed o adi ional heo e ical lenses. Ou main con ibu ion is o he s udy
o pe o mance in inno a ion-in ensi e en i onmen s.
Keywo ds: so powe ; o ganiza ional lea ning; inno a ion-in ensi e en i onmen s; CEO; egula o y
ocus; i m pe o mance
1. In oduc ion
Resea che s a e inc easingly ealizing ha he e is no a single model ha adequa ely
depic s i m pe o mance in all ma ke con ex s o all inno a ion egimes (James e al. 2013;
Kaplan and Mu ay 2010;San os and Eisenha d 2009;Volbe da e al. 2013). The p edomi-
nan pe spec i es ha explain i m pe o mance in inno a ion-in ensi e en i onmen s—
u he e e ed o as IIEs—a e ypically oo ed in esou ces (Cozzolino and Ro hae mel
2018;Ro hae mel and Deeds 2004), lea ning (Bingham and Da is 2012;S e ne and La ie
2014), o compe encies (Bi kinshaw e al. 2008;Teece 2019;Volbe da e al. 2013). Schola s
iew IIEs as ma ke s wi h a luid s uc u e (Da is e al. 2009), and ma ke s plagued by
unce ain y (Leiponen and Hel a 2010) and dis up ion (Kaplan and Vakili 2015). In IIEs,
inno a ion g ow h, ei he dis up i e o non-dis up i e (Kim and Maubo gne 2019), in e nal
o ex e nal (Di Gua do and Ha igan 2016;Hess and Ro hae mel 2011;La ie e al. 2011;
Yamakawa e al. 2011;Yang e al. 2011), ep esen s he mos widely used means o sus ain
and p omo e i m pe o mance (Kim and Maubo gne 2019). Howe e , mixed indings
show ha i ms ha ga he he mos esou ces, lea n and apply he bes p ac ices, and
de elop app op ia e compe encies do no necessa ily pe o m be e in highly ambiguous
en i onmen s such as IIEs (S e ne and La ie 2014). Ins ead, poli ical science schola s
emphasize he ole o achie ing cogni i e and compe i i e ma ke dominance as impe -
a i e o pe o mance in highly unce ain en i onmen s (Nye 2004,2013). In his pape ,
we in eg a e mains eam heo izing on he ole o lea ning in IIEs wi h mo e ecen so
powe heo izing on he impo ance o ma ke con ol unde high unce ain y. We adop a
powe -lea ning pe spec i e ha in eg a es i ms’ abili y o con ol he pace o inno a ion
g ow h wi h he abili y o lea n on he go. We claim ha a powe -lea ning iew be e
explains he di e ences in IIE i ms’ pe o mance han indi idual iews can.
Adm. Sci. 2024,14, 169. h ps://doi.o g/10.3390/admsci14080169 h ps://www.mdpi.com/jou nal/admsci
Adm. Sci. 2024,14, 169 2 o 22
Bo owed om he poli ical sciences ield o esea ch (Nye 2004), he so powe
pe spec i e explains how i ms in highly unce ain en i onmen s es ablish cogni i e and
compe i i e dominance by claiming, dema ca ing, and con olling he ma ke (San os
and Eisenha d 2009). We iew so powe as elemen al in IIEs. Unde he p essu e o
unce ain y in oduced by inno a ion ansi ions (Adne and Kapoo 2016), ha d powe
e lec ed in coe cion and con ol is signi ican ly dilu ed (D ees and Heugens 2013;San os
and Eisenha d 2009), being eplaced by so e mechanisms. We iden i y wo powe -
building mechanisms ha s and apa in IIEs and ha can cla i y mos o he unce ain y
su ounding he alue o i ms’ inno a ion (San os and Eisenha d 2009): (1) c ea ing he
illusion o powe , and (2) exploi ing o he s’ endency o s ick o he amilia . IIE i ms
applying hese so powe le e s con ou hemsel es as powe ul playe s, es ablishing
cogni i e dominance in a noisy en i onmen .
The deg ee o which inno a ion g ow h a ec s pe o mance in IIEs depends on IIE
i ms’ abili y o lea n as well (Anand e al. 2016;Bingham and Da is 2012;Musaji e al.
2020). The inno a ion p ocess is in i sel a lea ning p ocess (Kale and Singh 2007) shaped
by cha ac e is ics o he en i onmen (Yang e al. 2011), o he compe i ion (Kim and Mine
2007;La ie e al. 2011), and o he i m (James e al. 2013;Kale and Singh 2007;Kaplan
and Vakili 2015). IIEs a e ambiguous and as -paced (Adne and Kapoo 2016;Kim and
Maubo gne 2019), and ha e equen inno a ion e en s bu ew simila cases (Eisenha d
1989;Wi z e al. 2007). They expose i ms o aul y lea ning (Anand e al. 2016;Di Gua do
and Ha igan 2016), in o ma ion o e load (Dahlin e al. 2018), limi ed o inco ec eedback
(Anand e al. 2016;Kim e al. 2009), and insu icien ime o e lec on he p ocess (Musaji
e al. 2020). Lea ning in IIEs pe ains o lea ning om limi ed expe iences (Bingham
e al. 2015;Dahlin e al. 2018). The equen changes, as pace, and high unce ain y o
IIEs p esen i ms wi h high lea ning ailu e a es (Desai 2011;Edmondson e al. 2001).
The bene i s o lea ning om expe ience a a low inno a ion pace a e aded o cos s as
he inno a ion pace inc eases (Ve meulen and Ba kema 2002). The bene i s and cos s o
lea ning in IIEs complemen i ms’ abili y o use so powe o imp o e pe o mance as
spu ious lea ning necessi a es mo e illusions o powe o be c ea ed by i ms in o de o
achie e he same pe o mance ou come.
The high unce ain y ha IIE i ms a e exposed o b ings in o play he mo i a ion
ha i ms ha e o pu sue ce ain inno a i e beha io s. Beha io al s a egy schola s
showed ha CEOs’ in insic impe us o ei he maximize posi i e ou comes (p omo ion
ocus) o minimize losses (p e en ion ocus) shapes he deg ee o which i m-le el ac o s
d i e i m ou comes (Das and Kuma 2010;Galinsky e al. 2005). Essen ial o indi idual
decision-making (B ockne e al. 2004), sel - egula ion po en ially shapes i ms’ p ocli i y
o enac ce ain powe -lea ning mechanisms o e o he s. Unde he as pace and ex eme
unce ain y o IIEs, CEOs’ p e e ence o achie emen o e sa e y (C owe and Higgins 1997;
Higgins 1998) shapes hei p e e ence o using ce ain so powe le e s as well as he way
i ms accumula e and deploy knowledge. We expec CEOs’ indi idual sel - egula ion o
bound i ms’ pe o mance h ough he choice o powe -lea ning le e s enac ed.
In eg a ing powe -lea ning and sel - egula ion, his pape p oposes a mode a ed
model p edic ing i ms’ pe o mance in IIEs. We p opose ha he pe o mance o IIE
i ms is de e mined by he pace o inno a ion and ha his p ocess is shaped by i m
leade s’ indi idual p e e ence o achie emen o sa e y. We in eg a e so powe and
lea ning mechanisms and p opose a mode a ed bene i –cos model o he inno a ion pace–
pe o mance ela ionship. The bene i –cos analysis builds on he join conside a ion o
so powe and lea ning le e s and is shaped by he indi idual-le el mo i a ion o pu sue
hese s a egic ac ions. We ask: How does CEOs’ sel - egula ion shape he inno a ion–
pe o mance ela ionship in IIEs?
The co e heo e ical con ibu ion o ou s udy is a amewo k ha explains i m ma ke
pe o mance h ough a powe -lea ning lens and places i in he con ex o decision-make s’
mo i a ion o ac ion. The pe o mance he e ogenei y o IIE i ms highligh s he need o a
new pe spec i e on i m inno a ion, one ocused on he bene i s and cos s o inno a ion
Adm. Sci. 2024,14, 169 3 o 22
g ow h and pace. The join conside a ion o so powe and lea ning mechanisms opens
in iguing a enues o bo h inno a ion and s a egy esea ch. In wha ollows, we p o ide
a comp ehensi e backg ound on he li e a u e ela ed o so powe , lea ning, and CEO
mo i a ion behind s a egic ac ion in IIEs. We o mula e and es hypo heses. We ind ha
inno a ion g ow h d i es IIE i ms’ pe o mance ollowing an in e se U-shape and lowe s
pe o mance as pace inc eases. CEO egula ion s ongly mode a es bo h ela ionships,
highligh ing he ole o indi idual mo i a ion in IIEs. Las ly, we discuss implica ions and
sugges ions o u u e esea ch.
2. So Powe , Lea ning, and CEO Sel -Regula ion in IIEs
IIEs a e apidly g owing ma ke s wi h blu ed bounda ies (Adne and Kapoo 2016;
Ahuja e al. 2008) ha lack a clea sense o wha ela ionships and compe encies a e
aluable (Bingham and Da is 2012), ha e luid business models (Sua ez e al. 2015;Teece
2000;Ve meulen and Ba kema 2002) and possibly un eliable pa e ns o beha io (Pen land
and Feldman 2008), and a e plagued by lea ning discon inui ies (Anand e al. 2016) and
spo adic changes in demand, playe s, and egula ions (Eisenha d 1989;Ha gadon and
Douglas 2001). Go e ned by ex eme unce ain y, IIEs a e unp edic able. Fi ms a e no
only unable o p edic he u u e ha hei inno a ions migh b ing, bu hey may also be
con used abou he alue o hei own physical (Bingham and Eisenha d 2011) o lea ning
esou ces (Anand e al. 2016;Bingham and Da is 2012), and abou he meaning o hei
own ac ions (Da is e al. 2009). IIEs a e also hype compe i i e (Cozzolino and Ro hae mel
2018;Pacheco-de-Almeida 2010). The inno a ion pace dic a es he pe o mance ou come
(Adne and Kapoo 2016;James e al. 2013) and s a egizing how o lea n b ings subs an ial
bene i s (Beh ens and Pa zel 2018;Dahlin e al. 2018;Eisenha d 1989;Vlas e al. 2023;
Ve meulen and Ba kema 2002).
The only ce ain y o IIEs is he need o inno a ion. In e nal inno a ion e lec s
IIE i ms’ o ganic e o s o gain powe by lowe ing esou ce dependencies (D ees and
Heugens 2013), de eloping new knowledge (G illi sch e al. 2019;Kaplan and Vakili 2015),
o expanding in o new ma ke s (Cozzolino and Ro hae mel 2018;James e al. 2013;Vlas
e al. 2022;Yang e al. 2011). Unde high unce ain y, in e nal inno a ion can help i ms
gain a powe ul posi ion om which o d aw pe o mance bene i s (Keil e al. 2008).
While he impo ance o inno a ion o he pe o mance o IIE i ms is unques ionable,
he ole o inno a ion g ow h and pace may be (Musaji e al. 2020;Shan e al. 2016). Only
ecen ly, esea che s paid a en ion o he pace o ce ain business ac i i ies and ound ha
pace has bo h posi i e and nega i e pe o mance e ec s (Nadka ni e al. 2016;Pacheco-de-
Almeida e al. 2015;Shan e al. 2016). How much and how as seems o ma e , and as e
is no necessa ily always be e (Musaji e al. 2020;Shan e al. 2016). Bo owing om his
li e a u e, we ocus on he magni ude and pace o inno a ion g ow h and in es iga e hei
ole on IIE i ms’ ma ke pe o mance h ough powe -lea ning lenses.
Consis en o he so powe pe spec i e (Nye 2004,2013;San os and Eisenha d 2009),
he mechanisms ha a ec IIE i ms’ ma ke pe o mance a e based on wha ma e s mos
o hose e ec ua ing he alua ion— he in es o s, he analys s, he s akeholde s a la ge.
The unde lying powe mechanisms ha d i e in es o s’ alua ion o pe o mance a e
ela ed o a i m’s abili y o es ablish cogni i e dominance by becoming a e e en o ha
ma ke (San os and Eisenha d 2009). The ma ke pe o mance o he i m in IIEs is hus
a e lec ion o he i ms’ abili y o educe unce ain y o o he s by using wo so powe
mechanisms: c ea ing he illusion o powe and exploi ing o he s’ endency o amilia i y
(San os and Eisenha d 2009).
Acco ding o his pe spec i e, so powe helps i ms o e come he ac ha he
accumula ed ha d powe may no be applicable in unce ain y-plagued IIEs a e inno a ion
discon inui ies happen (Adne and Kapoo 2016;Nye 2013). In discon inui y-plagued IIEs,
he op imal combina ion o so powe mechanisms ha i ms need o adop a ec s hei
ma ke pe o mance di ec ly, wi h mo e mechanisms adop ed ha ing a highe powe o
a ec he i m-le el ou come. O cou se, wha so powe mechanisms a e applied depends
Adm. Sci. 2024,14, 169 4 o 22
on he ype o inno a ion ha is pu sued. Also, he e ec s o he mechanisms ha a e
applied a ec i ms’ ma ke pe o mance o di e en deg ees. Fo example, inc emen al
inno a ions may make i easie o i ms o exploi o he s’ endency o s ick o some hing
amilia (Hess and Ro hae mel 2011;Kim and Maubo gne 2019), bu adical inno a ions
may d i e highe illusions o powe (Beh ens and Pa zel 2018;Kaplan and Vakili 2015).
While in his s udy we do no di e en ia e inno a ion beha io by he ype o inno a ion,
we poin o he ac oge he , hese so powe mechanisms de ine i ms’ inno a ion beha io
in IIEs. Ul ima ely, his beha io es ablishes he i m as a e e ence poin o o he s, lowe ing
he unce ain y o i s u u e ma ke pe o mance.
Beyond he so powe ha IIE i ms may enac o d i e a highe alua ion o pe -
o mance, lea ning has been iden i ied as a key d i e o pe o mance (Anand e al. 2016;
S e ne and La ie 2014). Fi ms’ lea ning in IIEs is iewed as essen ial because i helps o e -
come ine ia (Gilbe 2005;Haunschild e al. 2015;Le in hal and Ma ch 1993), con ibu es
o new capabili y de elopmen (Bingham e al. 2015;Kale and Singh 2007), imp o es
adap abili y (Bingham e al. 2015;Kale and Singh 2007), and suppo s esou ce and ou-
ine enewal (B esman 2013;Edmondson e al. 2001;Pen land and Feldman 2008;Teece
2019). While he key p emise o o ganiza ional lea ning esea ch is ha i m-le el ou -
comes imp o e wi h expe ience (Cye and Ma ch 1963;Liebe man 1987), he use ulness
o expe ience in changing con ex s is limi ed (Anand e al. 2016;Annosi e al. 2020;Di
Gua do and Ha igan 2016;Kim e al. 2009). The isks o lea ning when expe ience is
limi ed s em om spu ious successes and ailu es ha he changing en i onmen causes
(Dahlin e al. 2018). Among he p oblems, schola s highligh nega i e ans e (O’G ady
and Lane 1996), educed mo i a ion o lea n (Haunschild e al. 2015), in e p e abili y and
con usion (Dahlin e al. 2018), alse lessons (Anand e al. 2016), a lack o pa e ns leading
o he eplacemen o eliable ou ines (Annosi e al. 2020;Kim e al. 2009), con ounding
in e ences and gene aliza ions (Kim e al. 2009), un eliable da a leading o supe s i ious
lea ning (Dahlin e al. 2018;Ma ch e al. 1991), a lack o causali y, and an unclea ela ion-
ship wi h pe o mance (A go e and Mi on-Spek o 2011). To complica e lea ning, he as
pace o e en s in insic o IIEs (Adne and Kapoo 2016) sh inks he pool o expe iences
ha can be used o lea n om (A go e e al. 2003;Kim e al. 2009). A as e pace in oduces
selec ion e o s (Anand e al. 2016;A go e e al. 2003;Dahlin e al. 2018) and in o ma ion
asymme ies (Kim and Mine 2007) ha make lea ning p oblema ic. Fas paced inno a ion
c ea es a high cogni i e bu den on decision-make s o lea n/unlea n (Zhao and Oli e a
2006). O e all, he ambigui y o IIEs poses a lea ning challenge o i ms compe ing in hese
con ex s, limi ing he pool o use ul expe iences o d aw om and impac ing i ms’ abili y
o s eamline ac i i ies in he sho un.
Beha io al esea che s ha e long a gued ha he e iciency o mechanisms enac ed by
i ms o d i e highe pe o mance a ies wi h i m cha ac e is ics (Hamb ick e al. 2015;
Higgins and Spiegel 2004;Hmieleski and Ba on 2008). Regula o y ocus heo y (C owe
and Higgins 1997;Higgins 1998;Higgins and Spiegel 2004) iews he mo i a ion ha i ms’
leade s ha e o pu sue ce ain cou ses o ac ion as ha ing a p o ound impac on o ganiza-
ional decision-making and beha io . The e m egula o y ocus e e s o an indi idual’s
endency o ei he achie e posi i e ou comes by being sensi i e o accomplishmen s and
aspi a ions (p omo ion ocus) o a oid nega i e ou comes by paying a en ion o sa e y
and obliga ions (p e en ion ocus) (C owe and Higgins 1997;Higgins 1998). Regula o y
ocus pe ains o sel - egula ion and goal a ainmen and encompasses he mo i a ion
ha d i es indi iduals wi h powe o decide such as he CEO (Lanaj e al. 2012) o p e e
ce ain cou ses o ac ion o e o he s (Johnson e al. 2010). This has special ele ance o
i ms na iga ing en i onmen s wi h ex eme unce ain y because he esponsibili y o
he success o ailu e o inno a ion alls on he one pe son a he op (Galinsky e al. 2005;
Gamache e al. 2015;Hamb ick e al. 2015;Neukam and Bollinge 2022). Due o he in insic
speci ics o each ype, CEOs’ sel - egula ion has he po en ial o ei he enhance o hinde
he pe o mance e ec o powe -lea ning mechanisms, hus mi iga ing o exace ba ing he
unce ain y su ounding i ms’ s a egic ac ion in IIEs.
Adm. Sci. 2024,14, 169 5 o 22
3. Hypo hesis De elopmen
3.1. Bene i s and Cos s o Inno a ion G ow h in IIEs
In he ollowing, he addi i e e ec s o la en mechanisms based on so powe and
lea ning pe spec i es help us explain an in e ed U-shape ela ionship be ween inno a ion
g ow h and ma ke pe o mance in IIEs. We a gue ha inno a ion g ow h acili a es he
enac men o so powe mechanisms ha d i e a posi i e ma ke pe o mance and, a he
same ime, inc eases he cos s o lea ning by limi ing he expe iences ha IIE i ms may use
o s eamline pe o mance.
The so powe pe spec i e a gues ha unde ex eme unce ain y, c ea ing he illusion
o powe and exploi ing o he s’ endency o s ick o some hing amilia educes unce ain y
by lowe ing he in o ma ion asymme ies obscu ing he ue alue o he i m (San os and
Eisenha d 2009). By g owing hei inno a ion pools, IIE i ms imp o e hei po en ial
o comme cializa ion (Leiponen and Hel a 2010) and limi hei likelihood o ailu e
(James e al. 2013). Enla ged inno a ion pools open up he oppo uni y o signal powe
and o ca e a dis inc ma ke space o he IIE i m. Inno a ion g ow h p o ides inc eased
ecombina o y po en ial (Kaplan and Vakili 2015;Yaya a am and Chen 2015) ha allows o
he euse o epu pose o olde inno a ions, lowe ing he chance o diminishing e u ns
(Ro hae mel and Deeds 2004). Appending he inno a ion base wi h new inno a ions
p ojec s sel -se ing illusions o powe as i ms’ knowledge base is e eshed and, a he
same ime, nou ishes some deg ee o ce ain y abou i ms’ ma ke po en ial ha esul s
om blending in olde inno a ions. The blend o some hing old and some hing new,
amilia i y and no el y, has been associa ed wi h com o and accep ance (Ha gadon and
Douglas 2001). Associa ed wi h posi i e in es o sen imen s (A hu s e al. 2009), he
balancing o so powe mechanisms o illusion and he exploi a ion o o he s’ endencies
lowe s he o e whelming in o ma ion asymme ies ela ed o IIE i ms’ powe . In es o s
eel ha hey become be e in o med abou i ms’ po en ial, igge ing a highe ma ke
alua ion o IIE i ms’ pe o mance.
While he so powe bene i s o g owing inno a ion accumula e as mo e mechanisms
a e implemen ed, so do he lea ning cos s. In IIEs, g owing he inno a ion pool adds com-
plexi y, and he unce ain y o he en i onmen makes expe iences episodic and eedback
ambiguous (Anand e al. 2016;Annosi e al. 2020). Gi en he deg ee o noise, he applicabil-
i y o lea ned expe iences is low (Musaji e al. 2020) and he chance o nega i e lea ning is
high (O’G ady and Lane 1996). The inc ease in complexi y inc emen ally exposes i ms o
in o ma ion o e load ha u he limi s lea ning (Dahlin e al. 2018). I c ea es con usion
abou he alue o new inno a ions and opens he doo o alse lessons (Dahlin e al. 2018;
Di Gua do and Ha igan 2016). The inc ease in complexi y o he inno a ion pool c ea ed
h ough ecombina ion imposes limi s on i ms’ unde s anding o cause and e ec (A go e
and Mi on-Spek o 2011;Ma ch e al. 1991). The lack o unde s anding in causali y su ges
as he olume o inno a ions inc eases, igge ing a sha p inc ease in he cos s associa ed
wi h imp ope implemen a ion. A high inno a ion g ow h le els, IIE i ms isk eplacing
eliable ou ines (B esman 2013;Edmondson e al. 2001;Pen land and Feldman 2008) and
isk con ounding in e ences because o un eliable da a (Kim e al. 2009;Zollo and Win e
2002). The lea ning cos s o inno a ion g ow h accumula e wi h limi ed unde s anding o
causali y and he implemen a ion p ocess, wi h limi ed applicabili y o expe iences, and
wi h he isks o nega i e lea ning, imposing limi s on how well IIE i ms pe o m.
O e all, we sugges ha in IIEs, i ms’ ma ke pe o mance depends on hei abili y o
g ow hei inno a ion pools in such a way ha e y low o e y high g ow h nega i ely
a ec s alue by imposing limi s on ei he powe o lea ning, bu medium g ow h balances
he powe bene i s and he lea ning cos s o maximize i ms’ pe o mance. Speci ically:
Hypo hesis 1. Inno a ion g ow h exhibi s an in e ed U-shape ela ionship o IIE i ms’ u u e
ma ke pe o mance.
Adm. Sci. 2024,14, 169 6 o 22
3.2. Inno a ion Pace and Ma ke Pe o mance in IIEs
P e iously, esea che s in es iga ed he ole o pace in he decision-making p ocess o
mo e accu a ely unde s and he mechanisms ha d i e i m pe o mance (Eisenha d 1989;
Kessle and Chak aba i 1996;Ve meulen and Ba kema 2002). Tha li e a u e a ibu es
an essen ial ole o he empo al dimensions o he p ocess, and explains ou come he e o-
genei y h ough lenses o accumula ion, p ocessing, and he implemen a ion o knowledge
in such a con ex (Nadolska and Ba kema 2014;Pacheco-de-Almeida e al. 2015). In IIEs,
inno a ion schola s iden i y pace as he key a ibu e o he lea ning p ocess (Bingham e al.
2015;Haunschild e al. 2015;Laamanen and Keil 2008). Inno a ion pace is pa icula ly
ele an in IIEs because IIEs ep esen con ex s wi h equen inno a ion e en s (Eisenha d
1989), accen ua ed in o ma ion ecency (Haunschild e al. 2015), and as -paced decision-
making (Da is e al. 2009;Nadolska and Ba kema 2014). On he posi i e side, a highe
inno a ion pace allows o mo e in o ma ion o be accumula ed in a sho e amoun o
ime, which, all o he ac o s being cons an , should help i ms lea n as e . Howe e , he
quali y, edundancy, and eedback o wha is lea ned has a high po en ial o be isola ed
and spu ious (Dahlin e al. 2018). A highe inno a ion pace hus imposes limi s on i ms’
lea ning by sho ening he ime o p ocess in o ma ion and eedback. These limi a ions o
idiosync a ic expe iences a e ein o cing in na u e as spu ious ailu es and successes cause
nega i e lea ning (Dahlin e al. 2018;O’G ady and Lane 1996).
A high inno a ion pace in ol es equen e en s (Laamanen and Keil 2008;Nadolska
and Ba kema 2014), which add o he complexi y o in o ma ion ha i ms ha e o p ocess
(Dahlin e al. 2018). I inc eases ambigui y and noise (Laamanen and Keil 2008) and
equi es i ms o de o e inc eased esou ces and ime o unde s and and p ocess he cause–
e ec ela ionships (A go e and Mi on-Spek o 2011;Musaji e al. 2020;Yaya a am and
Chen 2015). Causali y becomes unclea (Dahlin e al. 2018), inc easing he likelihood o
mis akes. Pe o mance eedback is ambiguous as well (Anand e al. 2016), and is likely o
be misguided as i ms a ibu e ailu es o chance (Zhao and Oli e a 2006), o e look he
impo ance o “nea misses” (Kim and Mine 2007), and hold on o lawed belie s (Kale and
Singh 2007).
The ein o cing na u e o limi ed expe ience (Zhao and Oli e a 2006) causes poo
lessons ha u he limi i m pe o mance as inno a ion pace con inues o inc ease. Spu i-
ous ailu es and successes lead i ms down inaccu a e o e en e oneous pa hs (Laamanen
and Keil 2008) and cause hem o inco ec ly modi y bes p ac ices and ou ines (Dahlin
e al. 2018). This nega i e ans e o knowledge om accu a e expe iences o spu ious
ones happens when manage s lack c ucial in o ma ion abou e en s and a e o ced o make
decisions unde he p essu e o ime o pe o mance (O’G ady and Lane 1996;S e ne
and La ie 2014). Manage s’ cogni i e bu den as hey ha e o con inuously ewo k hei
assump ions, gene alize, and make in e ences (Kim e al. 2009) leads o myopic lessons
(Le in hal and Ma ch 1993) and causes inco ec o e iding o e ec i e ou ines, leading o
mo e aul y lessons and spu ious successes. The nega i e pe o mance e ec accen ua es
as pace inc eases. In sum, we claim ha a highe inno a ion pace inc eases i ms’ lea ning
cos , which u he impedes pe o mance.
Hypo hesis 2. Inno a ion pace nega i ely a ec s IIE i ms’ u u e ma ke pe o mance.
3.3. The Mode a ing E ec s o CEO Sel -Regula ion
We s a by in es iga ing he bounda y ole ha CEO egula o y ocus, as an inde-
penden cha ac e is ic o CEOs’ pe sonali y (Johnson e al. 2010), has on he inno a ion
g ow h– i m pe o mance ela ionship. We expec ha CEO egula o y oci (p omo ion
and p e en ion) a ec he wo la en mechanisms—so powe and lea ning— ha oge he
lead o he in e se U-shape ela ionship hypo hesized. By a ec ing he so powe mech-
anisms, CEO egula o y oci shi he maximum pe o mance igh o le , allowing IIE
i ms o achie e he same ma ke pe o mance wi h mo e o less inno a ion g ow h. By
a ec ing he lea ning mechanisms, CEO egula o y oci shi he maximum pe o mance
Adm. Sci. 2024,14, 169 7 o 22
up o down, allowing IIE i ms o achie e a di e en le el o pe o mance wi h he same
in es men in inno a ion. In he ollowing, we d aw om he egula o y ocus heo y
(Higgins 1998) o explain how indi idual sel - egula ion mani es s i sel in he ela ionship
be ween inno a ion g ow h and pe o mance.
The egula o y ocus heo y es ablishes p omo ion and p e en ion oci as mo i a ional
cha ac e is ics ha guide an indi idual’s beha io owa d ei he achie emen o sa e y
(B ockne e al. 2004;Higgins and Spiegel 2004). The achie emen o ien a ion o p omo ion-
ocused CEOs gi es hese indi iduals he inne mo i a ion o o e alue inno a ion by
seeing chances in oppo uni ies as opposed o isks (Hmieleski and Ba on 2008) and by
e alua ing isks mo e lenien ly (Das and Kuma 2010). Such CEOs unde alue he sub le
so powe p ac ices and do no see he need o hem. P e en ion- ocused CEOs’ a e sion
o isk and unce ain y mo i a es hem owa d sa e decisions (Hmieleski and Ba on 2008)
ha minimize hei losses. They adop illusions as a way o minimize hei isks (Galinsky
e al. 2005) and c ea e ich s o ies o jus i y hei ac ions (Galinsky e al. 2005). Thei
p e e ence o so powe is oo ed in hei high p e e ence o sa e y and o sys ema ic
decisions cha ac e ized by high le els o due diligence (B ockne e al. 2004). O e all, we
expec di e en sel - egula ion o a ibu e di e en alues o he use o so powe , wi h
p e en ion being mo e likely o adop i .
CEOs’ sel - egula ion also a ec s i ms’ mo i a ion o lea ning in IIEs. The IIEs’
con ex exposes i ms o spu ious successes and ailu es (Dahlin e al. 2018) and equen
e en s (Haunschild e al. 2015). P omo ion- ocused CEOs ejoice a he bene i s o he
highe salience o he lea ning oppo uni y, which uels hei mo i a ion o achie emen .
P ima ily conce ned wi h maximizing possible e u ns, hey end o downplay possible
nega i e ou comes o lea ning om spu ious successes o ailu es associa ed wi h equen
inno a ions (Das and Kuma 2010), while no being wo ied abou he lack o ime o
p ocess in o ma ion o he oppo unism ha he si ua ion p esen s. Temp ed by he
oppo uni y, hey will emb ace spu ious lea ning, hus inc easing he cos s o lea ning
in IIEs. On he o he hand, p e en ion- ocused CEOs’ p e e ence o sa e p ac ices and
eliable ou ines (Gamache e al. 2015) makes hem eluc an o adop spu ious successes
and ailu es. The in o ma ion con en ambigui y (Zhao and Oli e a 2006) and he lack
o a p ope unde s anding o cause and e ec (Dahlin e al. 2018) shake he s abili y o
he play ield hey enjoy. Thei p e e ence o sa e y o e emphasizes he isks o spu ious
lea ning and limi p e en ion- ocused CEOs’ ou comes om engaging in inno a ion. Thei
p e e ence o a oiding unce ain y al oge he a o s he euse o es ablished ou ines
(Gilbe 2005), impeding he implemen a ion o new p ac ices o he modi ica ion o known
ou ines as equi ed by inno a ion g ow h (Annosi e al. 2020;Pen land and Feldman
2008). A simila poin is made by Bu ge -Helmchen (2007), indica ing ha he ou ines
and heu is ics o CEOs can be dependen on he ools hey use o make hei decisions.
As opposed o p omo ion ocus, p e en ion ocus seems o dec ease he cos s o lea ning
in IIEs.
O e all, we a gue ha p omo ion ocus will inhibi he use o so powe while
adop ing limi ed expe iences wi h mo e leniency. Fi s , his dec eases he bene i s o so
powe and inc eases he cos s o lea ning, la ening he cu ilinea ela ionship be ween
inno a ion g ow h and i ms’ ma ke pe o mance. Second, i shi s he poin o maximum
pe o mance o be achie ed wi h less g ow h. A he same ime, we a gue ha p e en ion
ocus inc eases he use o so powe bu impedes lea ning om limi ed expe ience. The
bene i s o so powe inc ease and he cos s o lea ning dec ease, s eepening he cu ilinea
ela ionship be ween inno a ion g ow h and i ms’ ma ke pe o mance. Addi ionally, i
shi s he poin o maximum pe o mance o be achie ed wi h signi ican ly less g ow h.
Hypo hesis 3a. CEO p omo ion ocus nega i ely mode a es he ela ionship be ween IIE i ms’
inno a ion g ow h and u u e ma ke pe o mance.
Adm. Sci. 2024,14, 169 8 o 22
Hypo hesis 3b. CEO p e en ion ocus posi i ely mode a es he ela ionship be ween IIE i ms’
inno a ion g ow h and u u e ma ke pe o mance.
CEO p omo ion and p e en ion oci also change he magni ude o he pace–pe o mance
ela ionship. P omo ion- ocused indi iduals’ com o wi h unce ain y and isks is-
à- is s a egic ac ion (Johnson e al. 2010) coupled wi h hei achie emen o ien a ion
(Galinsky e al. 2005) gi es hese indi iduals mo e us ha hey can na iga e he isks
and challenges o IIEs, allowing hem o accumula e expe ience as e . Less wo ied
abou making a mis ake and mo e wo ied abou losing an oppo uni y (Cowden and
Bendickson 2018;Johnson e al. 2010), p omo ion- ocused CEOs a e likely o expe ience
small ailu es and successes mo e o en (Galinsky e al. 2005). The high ecency o e en s
mo i a es hem o ac i s (Haunschild e al. 2015) and consequen ly commi mo e and
smalle e o s. Thei pa h o lea ning allows o inc emen al adjus men s ha co ec hei
i m’s pe o mance a each s ep and lowe s he cos s o lea ning om limi ed expe iences
(Anand e al. 2016). By con as , p e en ion ocus is a isk-a e se sel - egula ion mechanism
ha sensi izes indi iduals o possible losses (C owe and Higgins 1997). In esponse
o his conce n, p e en ion- ocused CEOs adop a conse a i e a i ude ha minimizes
he ulne abili ies and isks o which hey a e exposed (Higgins 1998). Thei need o
s abili y and sa e y is sa is ied h ough ca e ul planning and he sys ema ic conside a ion
o decisions (Gamache e al. 2015), which makes hem delay decisions un il su icien
expe ience has been accumula ed. They expe ience ailu es and successes less o en and
he associa ed lea ning cos s a e highe (Anand e al. 2016). They spend mo e ime ying
o iden i y and unde s and he bes pa h o success, which e en i iden i ied is likely
o be i ele an as he en i onmen changes oo o en. O e all, hei beha io inc eases
lea ning cos s.
Hypo hesis 4a. CEO p omo ion ocus mi iga es he nega i e e ec o inno a ion pace on IIE i ms’
u u e ma ke pe o mance.
Hypo hesis 4b. CEO p e en ion ocus accen ua es he nega i e e ec o inno a ion pace on IIE
i ms’ u u e ma ke pe o mance.
4. Me hodology
4.1. Da a and Sample
Because ou s udy ocuses on he ole o inno a ion g ow h o i ms’ ma ke alua ion,
we collec da a be ween 2005 and 2018, including om U.S. i ms ope a ing in adi ional
and in o ma ion echnology manu ac u ing indus ies (SIC 2000–3999 and SIC 7370–7379),
as well as a a ie y o se ice indus ies (SIC 4510–6320) such as elecommunica ions, da a
secu i y, o d ug p op ie a ies. This mul i-indus y con ex is ele an o h ee easons.
Fi ms in hese indus ies display he mos ac i e inno a ion beha io and o hem, ou
inno a ion g ow h and pace measu es a e pa icula ly ele an . These indus ies ha e
been domina ed by U.S.-based i ms wi h publicly a ailable da a, which is he eason many
p e ious inno a ion s udies ha e been based in hese indus ies (B esman 2013;Ro hae mel
and Deeds 2004;S e ne and La ie 2014), making he s udy highly ele an o p e ious
wo k. Las , mos o hese i ms a e la ge, wi h mo e han wo hi ds anked in Fo une 500
in 2019, making hem mo e likely o be di e se in e ms o leade ship (Lanaj e al. 2012),
hus ep esen ing a p ope con ex in which o es ou mode a ing e ec s.
We in eg a e h ee main da a sou ces. The Uni ed S a es Pa en s and T adema k
O ice (USPTO) is used o iden i y i ms’ inno a ion beha io . WRDS Compus a p o ides
he inancial da a necessa y o compu e i ms’ ma ke pe o mance and he inancial
con ols. EDGAR Online and companies’ o icial websi es p o ide access o i ms’ le e s
o sha eholde s, which a e used o ex ac CEO egula o y ocus. We use he Gene al
A chi ec u e o Tex Enginee ing (GATE) ool (Vlas and Robinson 2012) o ex ac CEO
egula o y ocus om each i m’s le e o sha eholde s. Ou inal da a se is a panel o 80
Adm. Sci. 2024,14, 169 15 o 22
Table 7. Reg ession o inno a ion pace on IIE i ms’ ma ke pe o mance.
DV: Ma ke Value +1 Hypo hesized
E ec Baseline Model 5 Model 6 Model 7 Model 8
Cons an 25.636 *** 70.703 *** 391.076 *** −79.820 ** 277.739 ***
(7.31) (13.83) (91.59) (28.89) (82.16)
Inno a ion pace H2– −0.091 *** −0.729 *** 0.194 *** −0.518 **
(0.02) (0.18) (0.05) (0.16)
CEO p omo ion ocus (PRO) −1.066 *** −1.227 ***
(0.30) (0.27)
Inno a ion pace ×PRO H4a+ 0.002 *** 0.002 ***
(0.00) (0.00)
CEO p e en ion ocus (PRE) 0.548 *** 0.583 ***
(0.10) (0.09)
Inno a ion pace ×PRE H4b– −0.001 *** −0.001 ***
(0.00) (0.00)
P e ious pe o mance (ln) 0.427 0.346 0.447 0.228 0.342
(0.38) (0.36) (0.35) (0.33) (0.31)
Fi m age (ln) −3.563 ** −3.330 * −3.096 * −1.712 −1.334
(1.35) (1.29) (1.25) (1.20) (1.13)
Fi m sol ency (ln) −0.059 −0.058 −0.037 −0.047 −0.020
(0.09) (0.09) (0.09) (0.08) (0.08)
Fi m ex e nal mode (d) −0.544 ** −0.483 * −0.462 * −0.226 −0.187
(0.19) (0.19) (0.18) (0.17) (0.16)
Pa en ing expe ience (ln) −0.090 −0.090 −0.040 −0.170 −0.121
(0.18) (0.17) (0.16) (0.15) (0.14)
Inno a ion newness (ln) −0.654 +−0.443 −0.721 * 0.013 −0.272
(0.37) (0.36) (0.35) (0.33) (0.32)
Inno a ion ocus −6.288 *** −5.083 *** −4.871 *** −3.411 ** −3.081 **
(1.12) (1.11) (1.08) (1.08) (1.01)
CEO age (ln) 0.842 0.745 0.720 0.562 0.514
(0.66) (0.63) (0.61) (0.58) (0.54)
CEO enu e (ln) −0.237 +−0.242 * −0.243 * −0.206 +−0.203 *
(0.12) (0.12) (0.11) (0.11) (0.10)
CEO gende (d) 0.149 0.162 0.144 0.071 0.043
(0.34) (0.32) (0.31) (0.29) (0.28)
CEO duali y (d) −0.582 −0.315 −0.136 −0.371 −0.182
(0.91) (0.88) (0.85) (0.79) (0.75)
CEO compensa ion (ln) −0.018 −0.040 −0.015 −0.075 −0.048
(0.15) (0.14) (0.14) (0.13) (0.12)
In e se Mills (λpace) −4.145 *** −3.940 *** −3.995 *** −3.105 *** −3.122 ***
(0.78) (0.75) (0.72) (0.70) (0.65)
Yea e ec s Yes Yes Yes Yes Yes
R-squa ed 7.5% 6.1% 10.9% 16.0% 27.8%
Inc ease in R-squa ed −1.4% 3.4% 8.5% 20.3%
F 5.65 *** 6.49 *** 6.92 *** 8.63 *** 9.89 ***
N= 205. Fi ms = 37. A e age obse a ions pe i m = 5.54. Sig:
+
p< 0.1, * p< 0.05, ** p< 0.01, *** p< 0.001.
Fixed-e ec s panel eg ession. S anda d e o s in pa en heses.
Adm. Sci. 2024,14, 169 16 o 22
Adm. Sci. 2024, 14, x FOR PEER REVIEW 16 o 23
Yea e ec s Yes Yes Yes Yes Yes
R-squa ed 7.5% 6.1% 10.9% 16.0% 27.8%
Inc ease in R-squa ed −1.4% 3.4% 8.5% 20.3%
F 5.65
***
6.49
***
6.92
***
8.63
***
9.89
***
N = 205. Fi ms = 37. A e age obse a ions pe i m = 5.54. Sig:
+
p < 0.1,
*
p < 0.05,
**
p < 0.01,
***
p <
0.001. Fixed-effec s panel eg ession. S anda d e o s in pa en heses.
(a) (b)
Figu e 3. (a,b) Inno a ion pace in e ac ions (p edic i e ma gins wi h 95% CI).
6. Robus ness and Pos Hoc Analyses
We es he obus ness o he esul s wi h se e al addi ional es s. Fi s , we conduc a
obus ness check o con i m ha he hypo hesized ela ionship be ween inno a ion
g ow h and ma ke pe o mance is indeed quad a ic. Adding a cubic inno a ion g ow h
e m does no imp o e he model i and es s ha he ela ionship is U-shaped and no S-
shaped (Lind and Mehlum 2010). Second, we spli he da a by he empi ically de e mined
u ning poin (Table 5: u ning poin = −β1/2β2 = 0.867) and e i y i he wo linea eg es-
sions show slopes consis en wi h he hypo hesized cu e. We ind ha he esul s a e
obus . Thi d, Winso izing inno a ion g ow h a he 1s and 99 h pe cen ile o he a iable
also e ie es e y obus esul s o he in e se U-shaped ela ionship.
Two addi ional checks a e pe o med o es whe he he p edic ed ela ionships hold
on a ious subsamples o he da a. We i s an ou models on a subsample o so wa e
and ha dwa e i ms (SIC 357, 367, and 737). These i ms (21.4% o i ms in he sample)
ha e a diffe en pa en ing beha io han pha ma, elecom, o manu ac u ing i ms in ou
o iginal da a se . The consis en esul s ha we ind suppo ou heo izing claiming ha
he in e play o so powe and lea ning mechanisms d i e he effec on ma ke pe o -
mance and no i ms’ engagemen in ambidex e i y, as some schola s migh claim (S e ne
and La ie 2014). To emo e he possible al e na i e explana ion ha being anked in he
Fo une 500 d i es i ms’ ma ke pe o mance mo e han powe -lea ning mechanisms, we
un a second check on a subsample o i ms ha a e no anked in Fo une 500. We also
ind ha he esul s hold.
Las ly, we in es iga e possible (in)cong uence effec s be ween he wo sel - egula ion
oci and hei possible effec s on he inno a ion–ma ke pe o mance ela ionship. Poly-
nomial eg ession allows us o in es iga e p edic o s’ linea and non-linea effec s as well
as hei in e ac ion (Shanock e al. 2010). G aphical ep esen a ion in he o m o esponse
su ace analysis allows us o be e in e p e and unde s and he ela ionships be ween
diffe en con igu a ions o he wo mode a o a iables (p omo ion and p e en ion) and
he main ela ionship (inno a ion g ow h × ma ke alue) (Edwa ds 1995). A po en ial
(in)cong uence effec is deno ed by a signi ican in e ac i e e m in he ull model
Figu e 3. (a,b) Inno a ion pace in e ac ions (p edic i e ma gins wi h 95% CI).
6. Robus ness and Pos Hoc Analyses
We es he obus ness o he esul s wi h se e al addi ional es s. Fi s , we conduc a
obus ness check o con i m ha he hypo hesized ela ionship be ween inno a ion g ow h
and ma ke pe o mance is indeed quad a ic. Adding a cubic inno a ion g ow h e m does
no imp o e he model i and es s ha he ela ionship is U-shaped and no S-shaped
(Lind and Mehlum 2010). Second, we spli he da a by he empi ically de e mined u ning
poin (Table 5: u ning poin =
−β
1/2
β
2 = 0.867) and e i y i he wo linea eg essions
show slopes consis en wi h he hypo hesized cu e. We ind ha he esul s a e obus .
Thi d, Winso izing inno a ion g ow h a he 1s and 99 h pe cen ile o he a iable also
e ie es e y obus esul s o he in e se U-shaped ela ionship.
Two addi ional checks a e pe o med o es whe he he p edic ed ela ionships hold
on a ious subsamples o he da a. We i s an ou models on a subsample o so wa e and
ha dwa e i ms (SIC 357, 367, and 737). These i ms (21.4% o i ms in he sample) ha e a
di e en pa en ing beha io han pha ma, elecom, o manu ac u ing i ms in ou o iginal
da a se . The consis en esul s ha we ind suppo ou heo izing claiming ha he
in e play o so powe and lea ning mechanisms d i e he e ec on ma ke pe o mance
and no i ms’ engagemen in ambidex e i y, as some schola s migh claim (S e ne and
La ie 2014). To emo e he possible al e na i e explana ion ha being anked in he Fo une
500 d i es i ms’ ma ke pe o mance mo e han powe -lea ning mechanisms, we un a
second check on a subsample o i ms ha a e no anked in Fo une 500. We also ind ha
he esul s hold.
Las ly, we in es iga e possible (in)cong uence e ec s be ween he wo sel - egula ion
oci and hei possible e ec s on he inno a ion–ma ke pe o mance ela ionship. Poly-
nomial eg ession allows us o in es iga e p edic o s’ linea and non-linea e ec s as well
as hei in e ac ion (Shanock e al. 2010). G aphical ep esen a ion in he o m o esponse
su ace analysis allows us o be e in e p e and unde s and he ela ionships be ween
di e en con igu a ions o he wo mode a o a iables (p omo ion and p e en ion) and
he main ela ionship (inno a ion g ow h
×
ma ke alue) (Edwa ds 1995). A po en ial
(in)cong uence e ec is deno ed by a signi ican in e ac i e e m in he ull model (Edwa ds
and Lambe 2007). We ind no signi ican in e ac ion e m in he inno a ion g ow h models
(
β
PRO
×
PRE =
−
0.011, p= 0.918;
β
PRO
×
PRE =
−
0.102, p= 0.601), in he inno a ion pace
(
β
PRO
×
PRE = 0.001, p= 0.708), o he inno a ion g ow h
×
inno a ion pace in e ac ion
(
β
INNG
×
INNP =
−
0.519, p= 0.229;
β
INNG_SQ
×
INNP = 0.061, p= 0.468). We conclude
ha he e a e no (in)cong uence e ec s be ween he wo sel - egula ion mode a o s (p o-
mo ion and p e en ion) o be ween he wo p edic o s (inno a ion g ow h and inno a ion
pace) ha may explain he obse ed e ec on IIE i ms’ pe o mance.
Adm. Sci. 2024,14, 169 17 o 22
7. Discussion
7.1. Theo e ical Implica ions
Wi h a speci ic ocus on IIEs, his esea ch in es iga es a no el powe -lea ning pe spec-
i e wi h po en ial o explain why and how i ms manipula e en i onmen al unce ain y
o ensu e a posi i e ma ke pe o mance. S a egy and lea ning schola s ha e long been
in e es ed in how i ms manage unce ain y in a ious con ex s (San os and Eisenha d
2009;Wi z e al. 2007), and a ainbow o explana ions om compe encies (Bingham e al.
2015;Teece 2019), ou ines (Annosi e al. 2020;Gilbe 2005;Pen land and Feldman 2008),
and knowledge scope (Leiponen and Hel a 2010), o esou ce combina ions (Ro hae mel
and Deeds 2004;S e ne and La ie 2014;Uo ila e al. 2009), signaling (A hu s e al. 2009)
and compe i i e dynamics (Cozzolino and Ro hae mel 2018;Nadka ni e al. 2016) ha e
been in oked o explain i . Ou pe spec i e aims o con ibu e o his body o li e a u e
by (1) ex ending schola s’ unde s anding o he p ocess h ough which he g ow h and
he pace o inno a ion a ec s ma ke pe o mance in IIEs, and (2) conside ing he CEOs’
mo i a ion behind he decisions ha uel his p ocess.
We add ess he i s poin by ad ancing a no el pe spec i e ha o e s insigh s in o
he bene i s o using so powe ac ics and in o he cos s o lea ning om expe ience when
inno a ing in IIEs. Speci ically, es ing ou heo e ical amewo k on a panel o IIE i ms
shows s ong suppo o an in e se U-shaped ela ionship be ween inno a ion g ow h
and ma ke alue as a measu e o pe o mance. P e iously, schola s ound suppo o he
same ype o in e ed U ela ionship when s udying he ela ionship be ween c ea i i y
and en ep eneu ship (Lehmann and Sei z 2016). When in es iga ing con ingency e ec s,
schola s ha e ound ha hese ela ionships a e also mi iga ed by so powe , cul u e, and
heu is ics. In addi ion o p e ious indings, we obse e ha maximum pe o mance is
achie ed when i ms’ inno a ion g ow h is in he middle o he possible ange, and no
when i ms inno a e oo li le o oo much, inding ha is in line wi h p io inno a ion
esea ch in s able en i onmen s (James e al. 2013). Fu he , we in es iga e he e ec
o inno a ion pace and ind ha speedy inno a ion is de imen al o pe o mance. The
inding esona es wi h p io esea ch showing ha he unce ain y o he IIEs complica es
he lea ning p ocess (Beh ens and Pa zel 2018;Pacheco-de-Almeida e al. 2015;Shan
e al. 2016) and ha as -paced inno a ion adds o he ambigui y al eady nu u ed by he
en i onmen (Adne and Kapoo 2016;Ve meulen and Ba kema 2002).
In add essing he second poin , his s udy in es iga es why he inno a ion–pe o mance
ela ionship a ies in IIEs, wi h some i ms leading he ma ke and o he s ba ely su i ing.
By inco po a ing leade s’ mo i a ion o s a egic ac ion (B ockne e al. 2004;Cowden and
Bendickson 2018;C owe and Higgins 1997;Higgins 1998), we ind ha he achie emen
and he a oidance o ien a ion o i ms’ CEOs a ec he deg ee o which inno a ion g ow h
and inno a ion pace ma e o IIE i ms’ pe o mance. The suppo we ind ells us ha
he mo i a ion o achie emen hu s pe o mance in IIEs bu he mo i a ion o sa e y
helps i . A deepe in es iga ion in o why his happens e eals ha he in e ed U e ec o
inno a ion g ow h on IIE i ms’ pe o mance lips almos immedia ely a e achie ing he
u ning poin . The shape lip aises a en ion on a heo e ical implica ion and an in e es ing
p ac ical implica ion as well (Haans e al. 2016). F om a heo e ical s andpoin , he shape
lip exposes a possibly conca e cos unc ion o expe ience (A go e and Mi on-Spek o
2011;Liebe man 1987;Musaji e al. 2020). Table 6shows ha he shape lip happens wi hin
he 95% con idence in e al o he mode a o . We obse e ha he alue a which he
shape lips om an in e se U o a U-shape happens almos immedia ely a e inno a ion
g ow h–pe o mance eaches he maximum poin . Fo IIE i ms led by a p omo ion- ocused
CEO mo i a ed by gain maximiza ion, he maximum pe o mance is eached when he
inno a ion g ow h a e is in he middle o he p omo ion ocus ange and holds as long as
he CEO’s mo i a ion o gain is no ex emely high. Fo CEOs wi h e y high ole ance
o isk and unce ain y, he cos s o using insu icien o inco ec expe iences (Dahlin
e al. 2018) inc easingly ade ela i e o he bene i s o lea ning om he esul ing ailu es
(Kim and Mine 2007;Musaji e al. 2020). We belie e ha he CEOs who ha e a e y
Adm. Sci. 2024,14, 169 18 o 22
high p omo ion ocus make almos eckless inno a ion decisions in IIEs in he absence o
su icien expe ience, ac ions ha leads hem o expe ience an inc eased numbe o small
and equen ailu es, om which lea ning occu s. Fo hem, he cos cu e associa ed wi h
in ensi ying he inno a ion e o s is p og essi ely ben as he p omo ion ocus o he CEO
inc eases, and his happens o such an ex en ha he cu a u e o he expe ience bene i
shape su passes ha o he cos o ailu e shape and esul s in a lip o he inno a ion
g ow h–IIE i m pe o mance ela ionship.
7.2. P ac ical Implica ions
F om a p ac ical s andpoin , can a highe mo i a ion o gain o sa e y coun e ac some
o he nega i e implica ions o no inno a ing enough? Empi ically, his can be obse ed
by in es iga ing how he u ning poin changes as he p omo ion o p e en ion o he CEO
inc eases. The maximum o he inno a ion g ow h–pe o mance unc ion mo es o he le
in bo h cases, which means ha as he CEO’s mo i a ion o ac ion inc eases, he inno a ion
g ow h necessa y o achie e he same pe o mance le el dec eases. In p ac ice, IIE i ms
mo i a ed by he gains ha inno a ion b ings a e likely o ha e mo e oppo uni ies o lea n
and will p obably lea n as e and mos ly based on mis akes han successes (Haunschild
e al. 2015;Kim e al. 2009;Kim and Mine 2007), and ewe inno a ions will be needed o
achie e high pe o mance le els. IIE i ms mo i a ed by sa e y and minimiza ion o losses
a e likely o pay close a en ion o how hei inno a ion s a egy un olds, and ewe bu
be e de eloped inno a ions will be needed o lea n (Bingham and Eisenha d 2011;Ma ch
e al. 1991). The bo om line is ha he ambigui y o IIEs canno gua an ee o a ibu e
any de ini i e bene i s o i ms’ inno a ion s a egy in he sho o long e m, and hus
i ms need o ha e a s ong mo i a ion behind hei inno a ion s a egy so ha he lea ning
p ocess pays o soone a he han la e .
7.3. Con ibu ions
The p oposed powe -lea ning pe spec i e con ibu es o ex ending bo h powe and
lea ning esea ch o IIEs. A g owing numbe o schola s showed ha in ela i ely s able
en i onmen s, ‘o e -inno a ion’ nega i ely impac s i ms’ pe o mance (Hess and Ro hae -
mel 2011;James e al. 2013;Kaplan and Vakili 2015;Yaya a am and Chen 2015). Ou
amewo k aims o con ibu e o his line o schola ly in e es emphasizing ha he mecha-
nisms ha i ms enac in IIEs a e oo ed in a combina ion o so powe and lea ning om
limi ed expe iences and no in escala ing diseconomies such as limi a ions o complexi y
(James e al. 2013). Ou emphasis on he ole o inno a ion g ow h and pace also highligh s
a gap in esea ch in es iga ing he empo al aspec s o inno a ion. While schola s ha e
only ecen ly begun o pay a en ion o he no ion o speed (Beh ens and Pa zel 2018;
Pacheco-de-Almeida e al. 2015;Shan e al. 2016), he ecogni ion o he impo ance o
inno a ion pace can be aced back o Kessle and Chak aba i (1996). Ou heo izing only
unde sco es he ele ance and impo ance o his new line o inqui y.
7.4. Limi a ions and Fu u e Resea ch
Wi h espec o his pape ’s limi a ions, he da a s uc u e equi emen s o his s udy
impelled us o es ic he sample o i ms o only IIE i ms in ce ain indus ies, hus
lacking gene alizabili y. Ou s udy co e s he analysis o a 15-yea pe iod o U.S.-based
IIEs such as pha ma, elecom, so wa e, ha dwa e, and ai c a . Gi en ha hese indus ies
possess unique cha ac e is ics equi ed o ou heo izing, he indings o his s udy canno
be gene alized o o he indus ies wi h dissimila inno a ion a es. Also, ou sample o
i ms is comp ised o mainly la ge i ms on he Fo une 500 lis , a limi a ion imposed by
he need o ind i ms ha egula ly publish le e s o sha eholde s needed o cap u e ou
mode a ion e ec s. As such, ou indings may no be gene alizable o indus ies domina ed
by small o medium-sized i ms. I would be in e es ing o see i i ms ou side o he
Fo une 500 lis di e in e ms o he powe -lea ning ac ics hey use, and whe he such
i ms achie e simila ma ke pe o mance e ec s.
Adm. Sci. 2024,14, 169 19 o 22
8. Conclusions
O e all, ou s udy is among he i s o examine bo h he an eceden s and he mo-
i a ional mode a o s o i m pe o mance in IIEs. Adop ing a no el powe -lea ning
pe spec i e, we emba k on a challenge o in es iga e why and how IIE i ms di e in e ms
o ma ke pe o mance. We es and ind suppo o he claim ha i m pe o mance
unde ex eme unce ain y equi es i ms o balance powe and lea ning mechanisms ha
subs an ially di e om he ones used in mo e s able ma ke s. Ou heo e ical angle is also
mean o uel a ecen line o inqui y ha ocuses on he ole o pace in IIEs and o ex end
schola s’ unde s anding o he ole ha leade s’ mo i a ion plays in such en i onmen s.
Au ho Con ibu ions: Concep ualiza ion, C.O.V. and E.S.; me hodology, C.O.V. and E.S.; so wa e,
R.E.V.; alida ion, C.O.V.; o mal analysis, C.O.V. and E.S.; da a cu a ion, R.E.V.; w i ing—o iginal
d a p epa a ion, C.O.V.; w i ing— e iew and edi ing, E.S. and B.B.d.G.; isualiza ion, C.O.V.;
supe ision, C.O.V., B.B.d.G. and R.E.V.; p ojec adminis a ion, C.O.V.; unding acquisi ion, C.O.V.
All au ho s ha e ead and ag eed o he published e sion o he manusc ip .
Funding: This esea ch ecei ed no ex e nal unding. The APC was unded by [Managemen
Depa men , Isenbe g School o Managemen , Uni e si y o Massachuse s Amhe s ].
Ins i u ional Re iew Boa d S a emen : No applicable.
In o med Consen S a emen : No applicable.
Da a A ailabili y S a emen : The aw da a suppo ing he conclusions o his a icle will be made
a ailable by he au ho s on eques .
Con lic s o In e es : The au ho s decla e no con lic o in e es .
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