The Indispensable Truism of Innovation - Improving competitiveness by exploiting the explanatory gaps of innovation theory Master’s Thesis Cand.Merc. MIB Copenhagen Business School Simon Høigaard Theland Anders Peter Riis Supervisor: Steen Andersen, Department of Management, Politics and Philosophy Characters: 272.724 (113 pages) September 2010 Resumé The present thesis contributes to the perception of innovations in three significant manners: 1) it proposes that innovation theory contains an explanatory gap in regards to the origin of innovations; 2) it develops a framework to explicate and investigate this gap; and 3) it presents tangible recommendations to companies on how performance can be improved by turning their attention towards the insights obtained in the thesis’ framework, analyses and conclusions. The thesis’ contributions to both the practical utilisation of and academic theorisation upon innovation are based on a cross-disciplinary analytical framework and thorough analysis of three distinct cases. Initially, we develop the analytical framework from a theoretical review of traditional and contemporary innovation theory and other branches of social science; more specifically history, sociology and philosophy. Consecutively, we conduct case analyses based on the framework, which constitute the foundation for the thesis recommendations in regards to companies’ performance. Concordantly, the last part of the thesis operationalises the insights and novelties from our analytical framework and analyses, and therefore presents tangible recommendations that supposedly can improve companies’ innovativeness, market insights, strategising and hereby performance. 1 0.1 Table of Contents 0.1 TABLE OF CONTENTS ................................................................................................................. 2 0.2 INTRODUCTION ............................................................................................................................ 4 0.3 FIELD OF STUDY ........................................................................................................................... 4 0.3.1 PART 1 OVERVIEW – EHE ANALYTICAL FRAMEWORK ................................................................ 5 0.3.2 PART 2 OVERVIEW – EHE CASE ANALYSES ................................................................................ 6 0.3.3 PART 3 OVERVIEW - EPERATIONALISATION ................................................................................ 7 0.4 RESEARCH QUESTIONS.............................................................................................................. 8 1.0 PART 1: ANALYTICAL FRAMEWORK .................................................................................... 8 1.1 THREE ANALYTICAL AXIOMS OF SOCIETY ..................................................................................... 9 1.2 DIAGNOSING CONTEMPORARY SOCIETY ...................................................................................... 13 1.3 THE ECONOMIC PILLAR ................................................................................................................ 13 1.3.1 The Inadequacies of Innovation Theory............................................................................... 13 1.3.2 Innovation through a Macro Perspective ............................................................................ 14 1.3.3 Creative Destruction and Macro Dynamics ........................................................................ 15 1.3.4 Following Schumpeter ......................................................................................................... 17 1.3.5 Where Do Innovations Originate: Certainties and Black Boxes in Economics................... 20 1.3.5.1 The Trifle of Organisational Settings and Size ............................................................................. 21 1.3.6 Circumventing The Black Box of Innovation Theory........................................................... 23 1.4 HISTORICAL PILLAR: THE IMPORTANCE OF HISTORY................................................................... 25 1.5 SOCIOLOGICAL PILLAR ................................................................................................................. 29 1.5.1 Discourse and Knowledge.................................................................................................... 30 1.5.1.1 The Foucaultian Discourse............................................................................................................ 30 1.5.1.2 The Questionable Blessing of Knowledge .................................................................................... 32 1.5.1.3 Genealogy and the Archaeology of Knowledge............................................................................ 34 1.5.2 The Methodology of the Foucaultian Archaeology.............................................................. 35 1.6 METHODOLOGICAL REMARKS ...................................................................................................... 36 1.6.1 Construction of The Research Object .................................................................................. 37 1.6.2 Foucault and Methodological Minimalism.......................................................................... 38 1.7 ANALYTICAL STRATEGY .............................................................................................................. 39 2.0 PART 2: ANALYSES..................................................................................................................... 40 2.1 THE GREAT NORTHERN TELEGRAPH COMPANY AND C.F. TIETGEN ............................................ 41 2.1.1 A Man of Initiative ............................................................................................................... 41 2.1.2 GNT in a Traditional Sense.................................................................................................. 42 2.1.3 The Imperialistic Zeitgeist and Tietgen................................................................................ 45 2.1.4 Preliminary Conclusion ....................................................................................................... 52 2.2 MICROCREDIT, MUHAMMAD YUNUS AND GRAMEEN BANK ........................................................ 54 2 2.2.1 The Success of Microcredit and Grameen Bank .................................................................. 54 2.2.2 Microcredit Analysed within an Economic and Innovational Perspective.......................... 56 2.2.3 Institutional Environment of Bangladesh............................................................................. 56 2.2.4 The Impossible Market and the Improbable Customer........................................................ 58 2.2.5 Discursive Limitations and the Origin of Microcredit......................................................... 60 2.2.6 Ideation within Discursive Limits ........................................................................................ 64 2.2.7 Preliminary Conclusions...................................................................................................... 65 2.3 ELECTRIC TRANSPORTATION AND THE SUSTAINABLE FUTURE .................................................... 66 2.3.1 Electric Vehicles – A Crash Course in Automotive History ................................................ 67 2.3.2 Perspectives of Traditional Innovation Theory.................................................................... 70 2.3.3 The Contribution of Traditional Innovation Theory ............................................................ 72 2.3.4 Foucaultian Analysis............................................................................................................ 75 2.3.5 Preliminary Conclusions...................................................................................................... 84 2.4 THE COMMON DENOMINATORS OF INNOVATIONS........................................................................ 86 3.0 PART 3: OPERATIONALISATION ........................................................................................... 88 3.1 IMPROVING INNOVATIVENESS ...................................................................................................... 89 3.1.1 Searching for Opportunities................................................................................................. 89 3.1.2 Exterior Needs – a Case Example........................................................................................ 92 3.2 DIAGNOSING AND FORECASTING THE BUSINESS ENVIRONMENT FOR STRATEGISING .................. 95 4.0 CONCLUSION ............................................................................................................................... 96 5.0 LITERATURE.............................................................................................................................. 101 3 0.2 Introduction The present thesis contends that innovation practitioners and scholars need to increase the comprehension of their contemporary society, which ultimately enables and determines the continuous realisation of innovations. Concordantly, the thesis at hand presents a novel approach to the origin of innovations and proposes managerial recommendations for corporate strategising, which presumably contribute to the improvement of competitive performance. Thus, by initially proposing a framework, which comprehensively and creatively elaborates upon pre-existing presuppositions of innovations, the present