Creative Cycles in Firms

20 Pages Posted: 26 Feb 2015

See all articles by Peter E. Earl

Peter E. Earl

University of Queensland - Faculty of Business, Economics and Law

Jason Potts

RMIT University

Date Written: February 9, 2013

Abstract

A widely observed yet little studied phenomenon in the competitive behavior of innovating firms is what we call ‘creative cycles’. This occurs when the firm’s innovative strategy cycles between bold visions and more conservative positions. We propose an appreciative theory of this dynamic behavior using agency theory (a principal and two agents) in the specific context of firms that contract in ‘creative vision’. Examples are provided, concentrating on the automotive industry. We conclude that while creative cycles are a constant risk for individual firms, there are also potentially significant net societal benefits due to the industrial dynamics they engender.

Keywords: creative cycles, entrepreneurship, innovation, industrial dynamics

Suggested Citation

Earl, Peter E. and Potts, Jason, Creative Cycles in Firms (February 9, 2013). Available at SSRN: https://ssrn.com/abstract=2291377 or http://dx.doi.org/10.2139/ssrn.2291377

Peter E. Earl

University of Queensland - Faculty of Business, Economics and Law ( email )

4072 Brisbane, Queensland
Australia

Jason Potts (Contact Author)

RMIT University ( email )

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