Risk and Innovation: A Perspective on Choices and Consequences

Abstract

Innovation is becoming mandatory for an increasing number of organizations in order to sustain competitive advantage and strengthen strategic position. This paper describes seven innovation-related risks. Specific risk patterns arising in four representative approaches to innovation, (research and development, internal ventures, joint ventures, and acquisition) are discussed The risk accommodating characteristics associated with specific environmental domain choices, with certain structural forms, and with alternate sources of competitive advantage are proposed. Composite recommendations that combine the risk characteristics of innovation approaches with the risk propensities resulting from organizational choices of domain, structure and competitive advantage are offered. Specific directions for future research, as well as the practical applications of these concepts, are discussed