Formalization and innovation revisited

Abstract

The many studies into the relationships between formalization and innovation have produced little but inconsistent findings. The conceptual and operational definition of the formalization construct is proposed to be one of the reasons for these inconsistencies. It is argued that aggregate (organization‐level) measurements of formalization are inappropriate and should be replaced with department‐specific or process‐specific measurements. Second, it is argued that formalization has been defined in an inconsistent way. However, it is not just the coexistence of different definitions (and their measurements) that is problematic. The exclusion, or improper inclusion, of rule observation from the conceptualization of formalization appears to be a third fallacy. A revised definition of formalization is advanced as a solution to these problems. This definition may prove to be instrumental in determining the true effect of formalization on organizational innovation.