Incremental Innovation and Risk: A Balancing Act for Federal Contractors
43 Pages Posted: 30 Aug 2017
Date Written: September 8, 2017
Innovation is a critical factor for the survival and success of both federal agencies and their contractors. However, implementation issues arise when these entities enter into a contractual partnership. On the one hand, federal projects inevitably face cost-reduction pressures, while the companies that support them—the contractors—must attain sufficient margins and ensure competitive advantage. Previously, innovation approaches for the federal sector were based on commercial models. In the current study, this researcher found that these issues largely occur because the public and private innovation approaches have differing drivers and benefits. Within this seemingly incompatible framework, government agencies must effectively contract to achieve innovation improvements.
This researcher found incremental innovation is most prevalent and is best conceptualized along a continuum. In order to achieve innovation within these partnerships, managers must take deliberate action, which entails consciously accepting levels of uncertainty and encouraging a risk-taking climate. This study uncovers the partnership challenges that are characterized and explained through underlying theories. A novel conceptual framework is proposed to examine incremental innovations within the federal contracting environment. As a result, engaged management scholarship will benefit from this research.
Keywords: incremental innovation, risk management, federal contracting, complexity theory, strategic buckets, and innovation partnership
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