Creative Cycles in Firms
20 Pages Posted: 26 Feb 2015
Date Written: February 9, 2013
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: Suggested Citation