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Pacing and Industry Clockspeed: Performance Effects of Relative Innovation Speed and Variability

2015; Academy of Management; Volume: 2015; Issue: 1 Linguagem: Inglês

10.5465/ambpp.2015.17166abstract

2376-7197

Markus Schimmer, Pankaj C. Patel,

Energy, Environment, Economic Growth

Empirical research on the performance effects of firm innovation speed has remained inconclusive. We argue that prior research has perceived higher innovation speeds overly beneficial as it missed out to consider industry clockspeed as the critical threshold speed firms need to surpass when they want to successfully compete with their rivals. Our longitudinal analysis of 243 S&P 500 firms and their respective industries between 2003 and 2012 supports this argument and establishes industry clockspeed as a critical threshold for firm innovation speed. Our finding of an inverted U-shaped performance relationship suggests that innovation speeds below or above industry clockspeed are characterized by inferior performance levels. Also counter to conventional beliefs, firms’ ability to dynamically de- or accelerate their innovation speed is not associated with linear positive performance effects, but characterized by declining marginal returns beyond the industry benchmark.