Innovation, Change and Rule-breaking

Competitive dynamics impact a firm’s necessity to adapt its capabilities permanently and to generate innovations continuously. Therefore, management practice claims for continuous change and the generation of substantial innovations. However, to a certain degree, change and innovation are associated with a break of a firm’s existing mode of operation. Routines and underlying rulesystems become object of change intentions. Concurrently, processes and structures are streamlined and, therefore, “rule-breaking” is inhibited. Firms oscillate between stability and change. This paper synthesise concepts of organisational routines, rule-systems and dynamic capabilities. Thus, a conceptual model of organisational learning in terms of rule-breaking as the basis for innovation and change is provided. Moreover, it integrates the topic of organisational non-learning – the defence of change impulses – whereby an organisation achieves stability and strengthens its identity. The firm’s development is characterised by the ratio between dynamic and perpetuation capabilities. These transformation/perpetuation routines facilitate and restrict the extent to which operational and innovation routines can be modified. Rulebreaking on this level represents first-order organisational learning. Second-order organisational learning occurs when the rules of underlying transformation/perpetuation routines and, consequently, the ratio between them become object of change. Finally, various forms of organisational design are analysed in regard to their potential for rule-breaking.