A Knowledge-Based Model of Radical Innovation in Small Software Firms
Authors: Carlo, Jessica Luo; Lyytinen, Kalle; Rose, Gregory M.
Journal: MIS Quarterly (2012)
DOI: 10.2307/41703484
In this paper, we adopt the lens of absorptive capacity (ACAP), defined by two dimensions—the knowledge base (consisting of knowledge diversity, depth, and linkages) and routines (consisting of sensing and experimentation)—to explain how a software firm’s knowledge endowments influence its level of radical information technology innovation during a technological breakthrough. We distinguish three types of IT innovations—base, processes, and service innovation—that form an innovation ecology. We posit that (1) ACAP is a relational construct where the impact of the knowledge base is mediated by routines; (2) IT innovations are either externally adopted or internally generated; and (3) knowledge antecedents associated with different types of innovations differ. We hypothesize a three-step, mediated path (knowledge base → sensing → experimentation → innovation) for external innovation adoption, and a two-step path (knowledge diversity/depth → experimentation → innovation) for internal innovation creation to explain the software firm’s level of radical innovation across three IT innovation types. We validate the model through a cross-sector study that examined how 121 small software fi…