Determinants and Consequences of Decision Errors in Innovation Development: A Comprehensive Empirical Investigation on the Organizational and Individual Level
Final Report Abstract
This DFG project addressed the research question of how specific decision errors in innovation endeavors occur and subsequently influence individual and organizational behavior. The phenomena under scrutiny comprise innovation failure and missing out on an innovation opportunity. While the former results from pursuing an inherently bad project, the latter results from not pursuing an inherently good project further. Focusing on these distinct decision errors, particularly the latter, three empirical subprojects fill relevant research gaps and help to formulate implications for scholars and practitioners. Subproject 1 investigates how erroneous project abandonment can occur through a stepwise process. The results show that the type of innovation project has implications for the uncertainty innovation project decision-makers perceive, thus determining their use of specific information-processing modes for project evaluation and decision-making. The employed information-processing modes affect the quality of an abandonment decision and, by extension, the likelihood of missing out on a valuable innovation opportunity. Subproject 2 examines how organizations respond to missing out on capturing an initially considered, innovation-related investment opportunity, i.e. merger and acquistions. Preliminary results show that the amount of subsequent spending in similar investment decision situations depends on whether an organization previously missed out on further pursuit or not. Subproject 3 examines how recently experienced decision errors influence decision-makers’ persistence with a currently underperforming innovation project. The results show that the willingness to persist with an underperforming innovation project depends on the type of decision error committed. In addition, the focal effect is contingent upon decision-makers’ self-regulatory ability. The results of all three subprojects help to formulate implications for practitioners. In particular, they help to sensitize practitioners to the occurrence and effects of innovation decision errors.
Link to the final report
https://hdl.handle.net/10419/318550
Publications
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“Project-related antecedents of abandonment error occurrence in innovation development,” Presented at the 30th IPDMC: Innovation and Product Development Management Conference, Lecco, Italy (June 7-9).
Hofmann, Björn & Monika C. Schuhmacher
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“Persistence with underperforming innovation projects after experiencing failure: A conjoint experiment,” Presented at the 31st IPDMC: Innovation and Product Development Management Conference, Dublin, Ireland (June 5-7).
Hofmann, Björn, Monika C. Schuhmacher & Kumar R. Sarangee
