Organizational Innovations: A conceptualization of how they are created, diffused and sustained

Abstract: Organizational innovations are essential for firms’ long-term competitiveness. In spite of this, there is less research on organizational innovations than on technical innovations. The purpose of this thesis is to contribute to our understanding of how organizational innovations are created, diffused, and sustained. The journey started by exploring the creation and diffusion of organizational innovations through a literature-review-based article and an empirical study on the organizational innovation ‘TQM’. The journey continued with an empirical study elaborating upon the role of the board in sustaining the organizational innovations ‘TQM’, ‘TPS’, and ‘Lean’. In each empirical study, data were collected through interviews, supplemented by secondary data. The three concepts ‘creation’, ‘diffusion’ and ‘sustainability’ of organizational innovations were found to be three intertwined concepts, rather than three separate and sequential ones. One reason was that organizational innovations were constantly re-invented through the processes of creation, diffusion, and sustainability. In this context, the concept ‘Sustainability’ refers to an improvement trajectory, rather than to a particular organizational innovation. The improvement trajectory is path-dependent and directs the creation, diffusion and sustainability of organizational innovations to and within a firm. Due to this complexity, a question was raised about how the creation, diffusion and sustainability of organizational innovations can be understood and conceptualized (RQ1). The answer is a conceptual model that integrates the three concepts ‘creation’, ‘diffusion’ and ‘sustainability’ in a five-step process, circling around a firm-specific improvement trajectory. The five steps are: ‘Desirability’, ‘Feasibility’, ‘First-Trial’, ‘Implementation’ and ‘Sustainability’. Each step is affected by three sets of influencing factors: the external context and interpersonal diffusion channels, the firm-specific internal context, and the characteristics of the innovation itself. To find out how the characteristics of organizational innovations affect the applicability of the conceptualization (RQ2), the conceptual model was tested on a different organizational innovation ‘Google’, identified in an empirical study conducted at Google, known for its focus on continuous innovation. The test showed that the conceptual model was valid also for ‘Google’ and was useful in identifying both similarities and differences in the creation, diffusion, and sustainability of ‘TQM’/’TPS’/’Lean’ on one side and ‘Google’ on the other.