Product and Process Innovation in Service Organizations: The Influence of Organizational Culture in Higher Education Institutions

Article excerpt

Executive Summary

Many organizations, particularly service organizations, have failed to stay atop their industries when confronting product and process innovation. These innovations place pressure on organizational culture-resources, structures, processes and values-for change. Some organizations appear to have an organizational culture that fosters adoption of both product and process innovations while others do not.

This study considered the organizational culture type of service organizations-particularly institutions of higher education-and innovative behavior related to them. Service organizations (Cameron and Quinn, 1999) including hospitals (Zammuto, Gifford and Goodman, 2001), and financial services (Cameron and Quinn, 1999) routinely reflect the clan culture, which espouses group values of loyalty, teamwork, and interpersonal cohesion. Likewise, 50.3% of the institutions in the sample reported a dominant culture type of clan. In addition, institutions reporting adhocracy as the dominant culture type reported higher frequencies of both product and process innovation than other culture types. This finding supports the logic provided by the Competing Values Framework, which suggests that the adhocracy culture type emphasizes operating values for innovation (Cameron and Quin, 1999). Many of the institutions in the sample reported no dominant culture type, thereby suggesting that some innovative institutions require a balanced culture, with similar emphases on each of the four dominant culture types. In summary, organizations desiring innovating could either embrace the adhocracy culture or seek to balance the organizational operating values among the various culture types of clan, adhocracy, market and hierarchy.

Introduction

The popular business press is filled with success and failure stories of firms that face environments characterized as fiercely competitive and ever-changing. Innovation is considered a critical component of business productivity and competitive survival (Zaltman, Duncan and Holbek, 1973). Technological innovations continue to hold vast opportunities for: 1) product innovation - the introduction of new types of goods and services for the external market and 2) process innovation - enhancement of internal production processes for goods and services (Perrio). Yet, these same innovations place pressure on organizational resources, structures, processes and values for change. Some organizations appear to have resources, structures, processes and values that foster adoption of both product and process innovations while others do not. Product innovations are significant to the life of any organization, as they provide the most obvious means for generating revenues (Johne, 1999). Similarly, process innovation is concerned with improving internal capabilities (Johne and Davies, 2000; Johne, 1999) and safeguarding and improving quality (Johne, 1999).

Many organizations, particularly service organizations, have failed to stay atop their industries when confronting product and process innovation. Moreover, many who failed to stay atop were, at one time, industry leaders. For example consider the history of organizations like, Detroit Edison, the New York Stock Exchange and Lucent. Albeit under different operating circumstances, each of these organizations met market and technological innovations with varying levels of responsiveness. In all cases, a decline in organizational performance resulted.

Explanation for the response to innovation of these organizations is what Christensen (1997) calls the Innovator's Dilemma. In this circumstance, market leaders do not demonstrate the ability to respond to innovations that are cheaper, simpler, and more convenient to use. Recent history offers several examples of organizations whose established technologies and market positions were interrupted by such innovations.

For example, the 1970's brought fundamental change in nearly all of the key external environments for Detroit Edison; such as, the energy crisis, nuclear power and the end of growth in demand (Denison, 1997). …