Spinning Straw Into Gold: Innovation Recycling, Innovation Sourcing Modes, and Innovation Ability in Sub-Saharan Africa
Rebecca Yu Li, Carlos M. P. Sousa, Xinming He, and Yansong Hu
kHUB post date: December 23, 2022
Originally published: July 18, 2022 (PDMA JPIM • Vol. 39, Issue 5 • September 2022)
Read time: 25 minutes
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As innovation is inherently risky and uncertain, it is common for firms to suspend or abandon new product/service development projects that cannot achieve pre-defined objectives. Multiple cases exist where firms have attempted to resume the development of an innovative product or service after previously suspending or abandoning it prior to completion. Research on this important innovation recycling activity is surprisingly scarce, despite its critical role in mitigating risk in the context of high environmental uncertainty. We draw our inferences from Sub-Saharan Africa (SSA), where innovation resources are relatively limited and environmental uncertainty and institutional voids prevail, a context that encourages the use of innovation recycling. This study examines how innovation recycling influences a firm's innovation ability and the moderating impact of innovation sourcing modes using a knowledge-based view of the firm and arguments from transaction cost economics. We retrieved data from the World Bank Enterprise Survey and the Innovation Follow-up Survey of 1076 firms located in eight SSA countries (Ghana, Malawi, Namibia, South Sudan, Sudan, Tanzania, Uganda, and Zambia) spanning from 2011 to 2014 to test our conceptual model. Our findings show that (1) innovation recycling has a positive influence on a firm's innovation ability and (2) this relationship is moderated by different innovation sourcing modes. These findings enrich the theory and imply that firms operating in developing countries need to develop innovation recycling by focusing on sourcing knowledge within, rather than across, firm boundaries.
- This research suggests that innovation recycling significantly improves a firm's innovation ability.
- Managers should periodically reflect on past innovation failures as a part of their formal innovation project management review process.
- This research suggests that the benefits innovation recycling brings to innovation ability is best combined with an in-house R&D instead of sourcing the R&D activities fully or jointly with an entity outside the firm.
- Managers need to create new knowledge while protecting the uniqueness of the knowledge accumulated in previous innovation effort in the process of innovation recycling, which requires a high degree of control over the learning process and a proper mechanism guarding against the risk of opportunistic behaviour.