Explaining Radical Innovation in System Development Organizations

Most studies on IS innovation have focused on explaining the adoption of IT by individuals or individual organizations. In contrast, only few studies have studied adoption of IS innovations by IS development (ISD) organizations. The current study extends the recent work of Lyytinen and Rose 2003 on the adoption of radical Internet innovations in system development organizations. In this paper we develop a causal model to explain the propensity of ISD organizations to innovate radically by integrating the existing literature in radical innovation into a parsimonious model. The model explains the propensity of development organizations to engage in radical IS innovation in integrating two critical capabilities: 1) technical sensing i.e. the extent to which IS development organizations are prone to identify and adopt radical computing capabilities and development process innovations, and 2) market opportunity seizing: i.e. the extent to which the ISD organization is capable to transform these capabilities to producing radical innovations in IS deploying organizations. We identify ten predictors for radical IS innovation behaviors where seven factors tap into features of technological sensing, and three factors measure organization’s transformative capacity. We use time as a moderator to explain the decreasing radicalness of IS innovations over the technology lifecycle. We formulate an instrument to test the model and report of a planned sectoral study to validate the model. The study will also attempt to validate the findings about the disruptive nature of Internet computing across a broad sample of the ISD industry.