A Theory of Innovation: Benefit, Harm, and Legal Regimes

Abstract

Given contextual pressures, firms increasingly adopt formal and legitimized innovation strategies, managerial practices, techniques or useful processes to achieve successful innovation outcomes. While much innovation research has contributed to a greater understanding of the economic, social, and individual benefits derived from new technologies, there has been little significant discourse about potential harms that can arise from innovation. But as innovators and managers apply innovation models, what informational choices and responsibilities do they have? And perhaps more importantly, under which circumstances are innovating firms most likely to create harm? Building on existing management and legal literature, we use an interdisciplinary approach to develop a theory of innovation, harm, and information. We contribute detailed conceptions of harm and innovation as well as an information-centric typology for innovation models. Our paper delineates six (6) propositions that predict the internal and institutional conditions under which firms would make innovation and information decisions that lead to harmful or beneficial behavior paths and outcomes. Our paper sheds theoretical light on a previously underexplored area and suggests that the choice of innovation approach does matter, especially when considering consequences to firm-external constituents.

Keywords: Change; corporate governance; creativity; discourse; ethics; harm;, information asymmetries; innovation models; innovation; institutional theory; legal liability; separation thesis; social responsibility; transparency