TITLE:
Research on Influence of Manager’s Innovation Preference on Innovation-Decision Making
AUTHORS:
Chen Tao, Yang Liu
KEYWORDS:
Innovation Preference; Principal-Agent Model; Disruptive Innovation; Profits from Innovation
JOURNAL NAME:
Technology and Investment,
Vol.3 No.3,
August
31,
2012
ABSTRACT: It is one of the key factors which cause “innovation dilemma” that managers prefer to support the sustaining innovation project. From the view of the manager’s innovation preference, the main propose of the paper is to study why it happened. The manager’s innovation preference will guide and motivate the staffs how to innovate, therefore it is appropriate to analyze it by using the principal agent theory. Conclusions can be got by establishing and analyzing a multi-task principal-agent model. First of all, the model basically explains why incumbent enterprises prefer adopting sustaining innovation and entrant enterprises are inclined to disruptive innovation project. Secondly, the selection rights of middle managers towards innovation projects determine the strategic direction of enterprises. Manager’s innovation preference is consistent with the innovation types of employees. At last, the paper suggests that incumbent enterprises should indeed establish self-organizations or spin-off organizations to better carry out disruptive business.