Evaluating the New: The Contingent Value of a Pro-Innovation Bias

It is a central tenet in the literature on organizational change that firms need to explore novel courses of action in order to adapt and survive. Should firms thus exhibit a “pro-innovation bias” when evaluating novel decision alternatives? Or should firms rather assess new opportunities as objectively as possible? Our analysis of a simulation model suggests that a pro-innovation bias can have exploration-enhancing effects that increase long-run performance in complex and stable environments, but can also decrease performance substantially if the bias becomes too pronounced. However, under most other conditions, an unbiased, objective evaluation of novel opportunities is most effective. We also identify a set of contingency factors that strongly affect the value of a pro-innovation bias, which may explain why it is that we see so few firms with such a bias.