WHO SHOULD WEAR THE PANTS? AN EMPIRICAL INVESTIGATION OF FUNCTIONAL DECISION-MAKING AUTHORITY IN INNOVATION DEVELOPMENT

Abstract

Effective decision-making in innovation development is decisive for innovation success, but also poses a major challenge for companies. Building on the information-processing view of organisational design, this study investigates how companies should organise functional decision-making authority in innovation development to engender innovation success. Additionally, this research explores the interplay between the design of functional decision-making authority and organisational innovativeness representing an aspect of organisational culture. Based on two datasets garnered from a survey and an experiment with managers experienced in innovation development, the study demonstrates that the dispersion of decision-making authority across functional groups positively affects the performance of an innovation. Further, the results reveal that environmental turbulence positively moderates the effect of the dispersion of decision-making authority on innovation performance. Finally, organisational innovativeness leads to a higher dispersion of decision-making authority. This study offers important implications for managers seeking to organise functional decision-making authority in innovation development more effectively.