Organizational Theory 'There Is a Thin Line Term Paper

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Organizational Theory

'There is a thin line between innovation and imitation in entrepreneurship.' Discuss this statement using perspectives from organization theory.

Innovation and imitation are both important propellers of economic development in different business sectors. The main difference between the two is probably represented by the legitimacy of each notion: innovation is creativity and inventiveness, while imitation is simply copying what somebody else has produced or has promoted. There is a middle way, imitation with improvement and development and this is probably more common throughout the business world. Rather than investing huge sums of money in research and development, one may prefer to take an existing idea and develop it to a degree to which it is viable, feasible and can maximize profit for the organization.

Imitation limits the costs and risks that are usually associated with innovation. The reason for this is that organizations that imitate will tend to invest less in their research and development activities or they will invest the same sum of money, but, by building on existing notions, they will obtain better results in a shorter period of time than starting from the very beginning.

According to Ethiraj, Levinthal and Roy the thin line of separation between innovation and imitation is given by the complexity of the innovation activity, notably how complexity is an important factor that will tend to deter imitation as the simple act of copying existing performances. This is turn will have an effect of solidifying the competitive advantage of an organization. Certainly, the degree of complexity in an organization is given by the organizational culture itself, but also by the ideas drawn from systems theory. The inputs and outputs can be seen as being interconnected by the innovation factor, which can vary in terms of complexity. A complex system governing the inputs and outputs of the organization will lead to a stronger separation line between innovation and imitation. The rules governing this system will be more difficult to interpret and understand and, as such, they will also be more difficult to understand and implement in another organization.

This idea can also be extended to comprise the finite products or services that come out of an organization. If we see an organization as a combination of management and psychology, then this framework will tend to influence the characteristics of the products and services that come out of that organization. The managerial and psychological forces will determine the organizational culture that will come out of the respective entity and will determine the organization's inclination towards innovation or imitation. An innovative management will also tend to be a trend opener and an innovator, both in terms of management and of final output on the market, while an imitating management, copying other ideas, will also tend to suggest a similar imitation in terms of the organization's output.

One of the theoretical conclusions has tended to show that modularity will increase innovation in an organization. Modularity has been explored in organization theory in the recent years, especially given the fact that the global expansions of different organizations brought about the need for decentralization. Modularity virtually refers to the capacity of an organization to function internally and externally with the help of modules or units. The interdependence between these modules can range, but usually, the more decentralized they are, the more innovation seems to be fostered within these particular modules.

This theory is quite interesting in analyzing the potential relationship between innovation and imitation within an organization rather between different organizations. Indeed, it would be interesting to note that the independence of the modules is likely to encourage innovation because the respective modules become almost solitary functional units within the same system. This type of environment will encourage the unit to function on its own and to seek the maximization of its own activity within the organization itself. This also means that the it will tend to innovate as a mean to maximize its performance.

Why innovate rather than imitate? Most likely because of a potential low interdependence and interconnection with the other modules that form the organization, the unit will be deterred from imitation and directed toward innovation as a way forward within the organization. This is probably something that can be translated to every individual forming those modules.

In other concepts, the thin line between innovation and imitation is explained with the help of the tremendous role of the entrepreneur himself, who can actually decide whether or not the entrepreneurial organization will take an innovative or an imitative path in its approach. This mentioned source uses the example of technology in South Korea, but this can certainly be extrapolated to any degree in other economic sectors in order to sustain the idea that entrepreneurship itself, as a notion, involves the idea of innovation, even if the initial technological input may come from elsewhere, be it another company or country.

The idea can be positively argues if we tie this concept to the organization theory. According to this, it is only natural for an organization that has started as a start-up business to carry along the initial entrepreneurial spirit of the initial innovator and to continue to innovate through its existence, rather than to imitate existing models. The act of initial creation in itself is seen as an entrepreneurial proof that the innovation process can continue throughout the period that the organization will operate on the market.

While this may be partially true, a split may also occur between the innovation in terms of entrepreneurship and management and imitation in terms of producing products and services and selling them on the open market. An entrepreneurship strategic approach may lead to an innovative leadership style. On the other hand, this is not necessarily an act of deterrence when it comes to the products or services that are being merchandised. The entrepreneur can simply decide that imitation can be a mean to improve business performance and maximize its profits.

Other theoretician will even tend to see the entrepreneur himself as a source of spreading imitation. Schmitz suggested that entrepreneurship is a factor of economic growth because the entrepreneur is a source of diffusing new knowledge at a reasonable cost-free pace. While this idea is 20 years old, it is still more than valid today, given the fact that the communication environment encourages information to spread extremely quickly around and new knowledge can go from one entrepreneur to another in virtually a short period of time. This notion almost puts an equal sign in terms of the ethical implications of one or another: imitation can have just as a positive role as innovation, given that it helps technological and knowledge spreading and that it can help organizations build on outside knowledge to improve their own systems.

We have seen that the entrepreneur plays an important role in setting the trend in the organization and that is also probably likely for any managerial body that is likely to carry a trend on a vertical hierarchical communication framework from top to bottom. We have discussed how an innovative leadership may lead to innovation being encouraged within the organization, although, as we have seen, this is not necessarily the case, since the management can often be innovative per se, as a method of leading the organization without reflecting in the output.

However, we also have to briefly analyze how the horizontal coordination and the relationships formed between peers will also help define the line between innovation and imitation in entrepreneurship. In my opinion, it depends again on the organizational culture and on the level that innovation is fostered within that organization. This will indeed help define the level to which the organization is likely to encourage cooperation for the spirit of innovation or for that of imitation.

Indeed, the knowledge exchange between peers can virtually go both ways at any given time. If we take, for example, a start-up software producing company, most of the individuals employed in this organization will be software developers. Between them, we are likely to have two different types of characters. We will have the innovators, those who study new approaches, find new solutions and implement them in their day-to-day work (although at some point they can also be imitators, drawing on the ideas from books etc. although here we need to make a distinction between learners and imitators), and we will have the imitators, who will base their work in the company on the knowledge that the former diffuse within the organization.

From this perspective, the relationships between the peers will tend to be those of innovator to imitator. This means that you will have those developing new solutions and those who will learn within the company about those solutions and use them in their own creation work. The organizational culture does play a role in this, because it can encourage both at the same time and both in a positive sense for the company itself in the long run.

For example, innovation can be fostered… [END OF PREVIEW]

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