Radical Innovation or Incremental Innovation: Strategic Decision of Technology-intensive Firms in the PRC

Abstract

With increasing international competition and rapid technological change, it has been emphasized that innovation is critical for technology-intensive firms to gain sustainable competitive advantages. However, we have little knowledge about which types of innovation should be adopted to overcome bottlenecks occurred during the process of firm's growth. From the contingency perspective, this study investigated the nature of incremental innovation and radical innovation reflected in the technological innovation, managerial innovation, institutional innovation and marketing innovation in different stages of the growth of Lenovo, one of famous technology-intensive firms in the PRC. The experience of Lenovo's growth suggested that it's very important to select right innovation strategies throughout its life cycle stages. Based on the case study, we proposed a general model of the strategic decision of innovation for technology-intensive firms in the PRC, the largest emerging economy in the world. It suggested that at the start-up or decline phase, firms should adopt radical innovation for technology, management, institution and marketing. At the growth phase, firms should adopt radical innovation for institution, but incremental innovation for technology, management and marketing. At the maturity phase, firms should adopt incremental innovation for institution, management and marketing, but both incremental and radical innovation for technology.