Business innovation doesn’t just come out of a void. It’s the product of innate abilities and effort, but also factors that sometimes escape analysis of even those seeking competitive advantage. One of the most cited works in the field of business innovation is a landmark 2002 paper in Industrial and Corporate Change, “Strong Ties, Weak Ties and Islands: Structural and Cultural Predictors of Organizational Innovation.”

The researcher, based at the University of North Carolina at Chapel Hill, examined innovation in more than 700 entrepreneurial teams attempting to start businesses. Particular attention was paid to the relationship between innovation and structural embeddedness, cultural embeddedness, and the team size.

The findings include:

• The longer entrepreneurs spend in an industry, the less likely they are to introduce innovative ideas to their startups and businesses. This negative effect of time in industry on innovation is still substantial when variables such as age and past entrepreneurial experiences are taken into account.
• Entrepreneurs who rely heavily on information from acquaintances (known as weak ties) are more likely to view themselves as innovators than those who rely on family and friends (strong ties) for information. Furthermore, individuals who use the public discourse as their primary source of information are 1.5 as likely as those who rely on strong ties, and 1.1 times likely than those who rely on weak ties, to view themselves as innovators.
• Innovation propensity was found to increase with the size of entrepreneurial team. “When large numbers of entrepreneurs are brought together, new combinations of ideas or routines become more likely.”
• While entrepreneurial experience may increase the likelihood of startup founders to seek legal protection for their ideas, there is no relationship between prior entrepreneurial experience and likelihood for innovation.
• Entrepreneurs in heterogeneous networks — a mixture of strong ties, weak ties, and advisors with no prior relationship — are more likely to innovate than entrepreneurs in homogenous networks. Social networks composed of completely heterogeneous ties are three times more likely to encourage innovation than social networks with completely homogenous ties.
• Teams composed of strong tie networks are less innovative than those with weak tie networks. Teams comprised of weak tie networks are in turn less innovative than teams whose members have no prior relationships.
• Team members’ different tenures in industry or amount of time spent in particular industries influence innovation levels. However, having team members with backgrounds in different industries, or industry diversity, did not have an effect on innovation.

The author summarizes innovation in this way: “Capacity for creative action is seen to be a function of the ability of entrepreneurs to (i) obtain non-redundant information from their social networks; (ii) avoid pressures for conformity; and (iii) sustain trust in developing novel — and potentially profitable — innovations.”

Tags: economy, technology, entrepreneurship