Micro-Institutional Affordances and Strategies of Radical Innovation

Abstract

Institutional theory emphasizes the institutional constraints that render radical innovations illegitimate, but fails to explain how such innovations might succeed. Adopting a micro-institutional perspective, this paper addresses why and how embedded agency may overcome legitimacy crises within established systems. Drawing on a sample of 20 legitimacy problems identified in five radical innovation trajectories at two mature companies, we develop an empirically grounded theory of the institutional work through which proponents legitimize radical innovations within established firms. This theory describes a variety of micro-institutional affordances that enable different strategic responses to legitimacy crises. We thus extend institutional theory by explaining embedded agents’ use of a range of options to pursue radical innovation, providing a robust explanation of both institutional stability and radical change.