Exploring How Resource Allocation Routines Inhibit the Pursuit of Disruptive Innovations as a Route to Corporate Entrepreneurship

Abstract

Given the corporate pursuit of discontinuous and breakthrough change, we work to deconstruct and shed understanding on managers’ failure to formally allocate resources to entrepreneurial activities that seek to deliver disruptive innovations. Using an interpretivist approach with field data from two primary and four secondary cases, we show that managers’ failure to recognise the restrictive impact of their mental models – their implicitly held images and beliefs – regarding the goals of innovation and organisational development will lead them to reject opportunities with disruptive potential. We design and implement a graphical Portfolio Management intervention to expose and overcome these maladaptive behaviours and find that managers employ up to five different ‘disruptive innovation rejection strategies’ when innovation opportunities are incongruent with dominant mental models. The rejection strategies are observed to be driven by the psychologically uncomfortable emergence of ‘cognitive dissonance’. We further ground the data in the often neglected literature from social psychology’s cognitive dissonance theory to generate implications for business leaders, instigating an innovative stream of research for those interested in further enhancing our understanding of the entrepreneurial pursuit of disruptive innovations.