In one paper, a researcher argues that consideration of firm strategy can help illuminate the choices managers make between debt and equity financing. Within an industry, the form of competition that each firm chooses will determine the strategic value to the firm of maintaining financial slack. The empirical analysis yields strong support for the proposition that financial slack should be a particularly critical strategic imperative for firms pursuing a competitive strategy premised on innovation. The researcher also demonstrates that firms pursuing such a strategy that fail to recognize the value of financial slack are likely to perform poorly.
O’Brien, J. P., 2003. The capital structure implications of pursuing a strategy of innovation. Strategic Management Journal 24 (5), 415–431.
Available at: http://onlinelibrary.wiley.com/doi/10.1002/smj.308/abstract
Mer från InventiveBoard
Open innovation and innovation culture
Researchers have examined open innovation cultures. Specifically they focused on the cultural dimensions of ‘not-invented-here’ (NIH) syndrome, risk-taking, and management support of innovative behaviour. The following provide guidelines for firms in their attempts to establish an adequate open innovation culture. Quantitatively assess current innovation…Läs mer
Management control for continuous innovation at Google
History is full of companies that were once innovative leaders but lost their innovative ability. One recent study explored, from a firm‐level perspective, organizational characteristics for continuous innovation in rapidly changing industries. Findings from 28 interviews at Google Inc., were compared to previous research…Läs mer