Edited by Tyrone S. Pitsis, Ace Simpson and Erlend Dehlin
Chapter 1: Relating management innovation to product and process innovation: private rents versus public gains
It is argued that management innovation has a major impact on the competitive advantage of firms (Hamel, 2006). Anecdotal evidence suggests that well-known management innovations like Toyota’s lean production system, ‘six sigma’ at General Electric and brand management at Procter & Gamble, have provided some firms with lasting performance gains. There is also a broader argument on the role of innovation in producing economic and societal progress. Baumol (2002) has argued convincingly that innovation is at the very heart of economic growth. Thus, management innovation has the potential to produce both private rents, generally interpreted in strategy research as above average returns, and public utility, which we define as the creation of positive outcomes for society at large. In an earlier paper we defined management innovation as ‘the invention and implementation of a new management practice, process, structure or technique that is intended to further organizational goals’ (Birkinshaw et al., 2008, p. 825). In that paper, our focus was primarily on new to the state of the art and often well-known innovations.
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