Magazine Fall 2009 Research Highlight

What Helps And Hinders Innovation?

Recent research explores the interdependencies between various approaches to innovation.

Daniel Tzabbar Reading Time: 1 min 

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Many organizations commit large amounts of resources to maintain their competitiveness through innovative activities. How do they ensure that those resources are allocated to the uses that are most likely to yield innovations? Answering this question is the focus of a study that I, along with several other researchers, recently conducted in the biotech industry. (A full description of the study was published in the November 2008 issue of Strategic Organization.)

Related Research
  • D. Tzabbar, B.S. Aharonson, T.L. Amburgey and A.
    Al-Laham, “When Is the Whole Bigger Than the Sum of Its Parts? Bundling Knowledge Stocks for Innovative Success,” Strategic Organization 6, no. 4 (November 2008): 375–406.

In this research, my coauthors and I set out to explore the interdependencies between various factors that may impact innovation success — and whether or not those factors work effectively together to help foster greater innovation. In particular, we researched the relationship between a company’s intellectual capital (what the organization knows through its codified patents), human capital (the proportion of the company’s scientific staff that consists of star scientists, as measured by prior innovation success) and collaborative capital (the company’s alliance portfolio and capabilities of working with others).

We used data from 843 biotech companies founded between 1973 and 1999; during this period, the companies collectively generated about 9,000 patents. Analysis of the data found that, to a statistically significant extent, the development of greater human capital, in the form of a higher percentage of star scientists, can decrease the likelihood of a company
developing new intellectual capital. Apparently, the presence of star scientists reduces a company’s creativity, as they rely on their existing knowledge to approach technological problems instead of seeking new ideas and solutions.

We also found that a high level of collaboration via alliances promotes innovation, as it encourages a free flow of ideas among the people who must work together to discover new solutions to problems. However, the existence of a high level of star scientists (human capital) inhibits both innovation and collaboration. Stars may have too much vested in their current thought processes — and organizations may have too much vested in their stars — to seek collaboration or new intellectual capital. Thus, from our study, it seems that in an innovative organization, a star-oriented culture has a dark side.

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About the Author

Daniel Tzabbar is an assistant professor of entrepreneurship and strategy at the University of Central Florida. He gratefully acknowledges the contributions of Robert C. Ford, a professor of management at the University of Central Florida, in the preparation of this article.

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Comment (1)
Anonymous
These are very interesting findings. But I find it disturbing that you generalize the finding about star scientists as a more general statement that human capital "can decrease the likelihood of a company
developing new intellectual capital." 

Knowledge (under your definition intellectual capital) cannot be developed without human capital. In fact, the field of intellectual capital recognizes three types of interdependent knowledge assets: human, relationship and structural knowledge. 

So the more important question is what is the right human capital strategy to support innovation.