Organizational Innovation

This paper examines the dynamic and multi-level relationship between organization and innovation from three different but interdependent perspectives: a) the relationship between organizational structural forms and innovativeness; b) innovation as a process of organizational learning and knowledge creation; and c) organizational capacity for change and adaptation. It provides a critical review of the literature, focusing especially on the question of whether organizations can change and adapt to major discontinuous technological change and environmental shifts, or whether radical transformation in organizational forms occurs principally at the population level through the process of selection. This is discussed with reference to organizational ecology theories, the punctuated equilibrium model and theories of strategic adaptation and continuous change. The paper argues that organizational innovation may be a necessary pre-condition for technological innovation, and thus it is important to take greater account of the role of endogenous organizational forces such as capacity for learning, values, interests and power in shaping organizational transformation and technological change.