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Does strategy formalization foster innovation? Evidence from a French sample of small to medium-sized enterprises

Author

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  • Marc Fréchet

    (COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne, TSM - Toulouse School of Management Research - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse)

  • Hervé Goy

    (COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne)

Abstract

Despite abundant research, the relationship between strategy formalization and innovation remains unclear. Some acknowledge a positive impact of strategy formalization on innovation while others consider it an impediment to novelty and creation. Going beyond the conflicting views over the influence of formalization, we combine open innovation and socio-material perspectives. This study aims to contribute to the debate by considering the possibility that formalization is a means of benefiting from openness with respect to innovation. Therefore, we predict that formalization might positively moderate the impact of openness on innovation. Relying on a unique sample of 555 SMEs, we investigate the effects of strategy formalization and openness—according to their various facets and interactions—on new product innovation. We find a positive influence of formalization (whether it is approached as a process or as a strategic tool) on product innovation. Our findings also support the idea that formalization increases the effectiveness of openness on innovation performance. Implications are discussed, and future research directions are outlined at the end.

Suggested Citation

  • Marc Fréchet & Hervé Goy, 2017. "Does strategy formalization foster innovation? Evidence from a French sample of small to medium-sized enterprises," Post-Print hal-01623788, HAL.
    • Handle: RePEc:hal:journl:hal-01623788
    Note: View the original document on HAL open archive server: https://hal.science/hal-01623788
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    References listed on IDEAS

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    Cited by:

    1. Stephanie E. Mansion & Andreas Bausch, 2020. "Intangible assets and SMEs’ export behavior: a meta-analytical perspective," Small Business Economics, Springer, vol. 55(3), pages 727-760, October.
    2. Houxing Tang & Zhenzhong Ma & Lei Jing, 2024. "Interfirm Network Structure and Innovation Creation: a Simulation Study," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 7622-7646, June.
    3. Omar Carrasco-Carvajal & Mauricio Castillo-Vergara & Domingo García-Pérez-de-Lema, 2023. "Measuring open innovation in SMEs: an overview of current research," Review of Managerial Science, Springer, vol. 17(2), pages 397-442, February.
    4. Mai Ngoc Khuong & Nguyen Quoc Loc & Nguyen Ngoc Duy Phuong & Nguyen Nhu Ty, 2023. "Strategist’s cognitive perspectives, innovation, and competitive advantage: An empirical study in Vietnam," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 41(1), pages 299-328.
    5. Son Thi Kim Le, 2019. "Innovation efforts in developing countries: The case of Vietnamese small and medium-sized enterprises," WIDER Working Paper Series wp-2019-7, World Institute for Development Economic Research (UNU-WIDER).

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    Keywords

    innovation; open innovation; strategy formalization; SMEs;
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