The role of institutions in achieving radical innovation

Purpose: The purpose of this paper is to analyze how institutions can facilitate or inhibit radical innovation. The authors argue that organizational radical innovation is necessary to maintain a competitive advantage and to evolve in the market place, and institutions are the basis of this innovation. From an innovation and service dominant (SD) logic perspective, network ties are proposed to be a determining factor for the achievement of innovation through institutionalization in the university knowledge management context. Design/methodology/approach: A conceptual approach is applied to develop and propose a framework for deepening understanding of radical organizational innovation, institutions and network ties. Data were gathered from Link by UMA-ATech, which in the context of the University of Málaga (Spain) is with great success developing a strategy based on fostering innovation. In all, 22 in-depth interviews were conducted with actors in the Link context, together with additional important second-order data analyses (sector analyses, statistics and company websites). Because of the perceived desirability of innovation, public universities have established a model as a part of this strategy in order to foster and develop new businesses through technology transfer. Findings: Changing institutional arrangements are the basis of innovation. Opening universities to the actors around them, with an interest in exchanging resources through the evolution of network ties toward a less bureaucratic and more collaborative and open university (tertius iungens) is the basis for reaching organizational radical innovation in the university context to develop the provider-driven radical innovation network structure via the “University Living Lab” theoretical model. Research limitations/implications: A conceptual understanding is used in combination with an empirical approach, in which one case study and 22 organizations are considered in the context of Link-by-UMA ATech, at the University of Málaga. A range of different contexts from other universities would also be useful to add new perspectives to the development of the theory. Practical implications: Although radical innovation is occasionally seen in systems and arises naturally in markets, it is interesting to consider the possibility of designing strategies that facilitate the process from the beginning of the design of the business model. In this sense, the present findings could help organizations in general and universities in particular, to devise strategies resulting in positive relationships that could facilitate the design of business model structures. These could in turn foster the development of new institutions resulting in new network ties, which could give rise to radical innovation through the attraction of new actors interested in exchanging service-for-service resources. Originality/value: The present paper develops the provider-driven radical innovation network structure of the “University Living Lab” theoretical model, which encourages the university to make decisions to devise more open models based on a change of network ties, in turn based on the design of new institutional arrangements. These concepts have not previously been put together, and build on the theories of institutions and organizational radical innovation. This theoretical contribution is framed within the SD logic perspective and specifically in the 11th fundamental premise (FP 11/5th axiom) to better understand how innovation occurs in service ecosystems, allowing the provider the possibility of developing such processes through the design of institutional arrangements.