Organisational Characteristics Influencing Adoption of Innovation

Although adoption of innovation ultimately needs to be driven by individuals,

organisational characteristics also significantly influence the likelihood of early adoption of innovations. Rogers (2003, p.404) defines an organisation as:

“…a stable system of individuals who work together to achieve common goals through a hierarchy of ranks and a division of labor. Organizations are created to handle large-scale routine tasks through a pattern of regularized human

relationships. Their efficiency as a means of orchestrating human endeavours is in part due to this stability, which stems from a relatively high degree of structure that is imposed on communication patterns.”

Ironically, it is the very characteristics that give an organisation its stability and continuity (that is, its inertia and routines), which can hinder its adoption of innovation. Conversely, organisations with a structure that initially discourages adoption of innovation can tend to facilitate their subsequent adoption. Barlow (1999, p.25, citing Tushman & Moore, 1982), describes ‘organisational pathologies’, which include “…previously successful behaviour

and fear of change, or the disruptive impact of innovation on existing organisational hierarchies, work processes or management structures.” However, this does not necessarily have to function as a barrier to change. As Sharp (n.d., p.22) argues,

“…[l]arge-scale transformation becomes possible when we are able to master the art of maintaining the stability of the organization, entity or process while engaging in the process of change.”

Barlow (2000) suggests that an organisation’s ‘absorptive capacity’ (the ways in which its knowledge is retained and distributed) is critical to successful adoption of innovations. He claims that the degree of capacity is influenced by factors including staff turnover, internal and external communication structures and the political and cultural environments. Koebel

& Cavell (2006) suggest that the three key factors influencing the propensity for early adoption of innovations within organisations are its structure; its culture; and the human resources. Further details are summarised in Table 2. As can be seen, organisational structure and culture are themselves complex but are clearly important issues that have to be considered in proposing strategies for change in the construction industry. These observations inform later discussion, particularly in Chapter 9.

Table 2 - Typical features influencing adoption of innovation within organisations (adapted from Koebel & Cavell (2006) and Rogers (2003))

Variable Influencing features

Factors positively correlated with innovativeness include its interconnectedness, or degree of linkages via

interpersonal networks; and the degree of organisational slack, that is, higher levels of uncommitted resources (typically linked with organisation size). Negatively correlated factors include the degree of centralisation (that is, the extent to which power and control are concentrated with fewer individuals), which tends to restrict the range of new ideas, and also the likelihood of decision makers being aware of operational problems or potential innovative solutions and the degree of

formalisation, that is how bureaucratic it is (Rogers, 2003).

Variable Influencing features

The organisation leader’s attitude to change is

particularly important in establishing an organisation’s innovativeness (Rogers, 2003). Business strategies emphasising innovation and the presence of technology champions contribute to innovation (Koebel & Cavell, 2006)

Koebel & Cavell (2006) cite numerous authors claiming that the breadth and depth of internal talent can promote innovation through greater potential for leadership, technological competence and increased sources of ideas; as well as greater capability to assess them and reduce uncertainty. Rogers (2003) agrees, finding a positive correlation between innovation and the degree of organisational complexity; which he defines as a high level of knowledge and expertise, range of occupational specialities and degrees of professionalism. However, Koebel & Cavell (2006) note that the greater capability for innovation from human resources will only be beneficial if organisations develop knowledge management tools to support it.

Management groups are also influential. Christensen & Raynor (2003) contend that middle management has a major role to play in either helping or hindering the adoption of innovations. They note that a role of mid-level managers is to ‘shepherd’ partially-formed ideas into business plans and win the support of senior management, but that they are unlikely to invest their energy heavily into new ideas if they are not assured, because of

fears that their reputation for good judgement, and ultimately career progression prospects will be threatened if they are seen to back ideas which ultimately prove unsuccessful. Clearly, an organisational culture would need to not only tolerate, but anticipate, a certain amount of failure if innovation is to be genuinely encouraged.

A further factor is the impact of organisation size on innovation, about which there is conflicting literature. The size of an organisation will significantly influence each of the three factors in Table 4. Size is typically is also a surrogate indicator of a company’s access to resources (and particularly slack resources), technical expertise and sources of information, improving its ability to be innovative. It also strongly influences organisational culture and human resources as smaller companies are less able to have a wide range of professional specialisation (Koebel & Cavell, 2006). In the case of construction

organisations, a discussion of organisation size is complicated by different approaches to defining it, whether by the size of a local branch or national organisation, or by number of housing starts (Koebel and Cavell, 2006).

Larger companies, by virtue of their size, tend to structure into departments. Volume builders surveyed by Koebel & Cavell (2006) typically had Finance, Marketing,

Purchasing and Information Technology departments. They were typically less likely to have internal departments focussed on technical matters, such as architecture and design (although more than half the surveyed companies had these); and less likely again to have engineering or research & development (R&D) departments (reported by a quarter to a third of the respondents).

Rogers (2003) claims a consistent positive correlation between organisation size and innovativeness, despite citing that conventional business thinking suggests that smaller organisations can be more flexible and have less bureaucracy to stifle innovation.

Similarly, Koebel & Cavell (2006) concluded that larger production builders tended to be more likely to adopt innovations than smaller production builders, and to introduce more radical innovations, particularly when they had national operations. This may be due to the advantage that larger builders have from operating in multiple geographic areas to reduce their risks from market cycles and increase the likelihood of regulatory acceptance of innovations (Blackley & Shepard, 1996), or from the fact they have more employees and capital and a better market position (Hassell et al., 2003).

By contrast, Slaughter (1993a, cited in Koebel & Cavell, 2006) found that small

homebuilding firms are a significant source of innovation. It is more likely in a smaller firm

that the owner would be both a technology champion and the decision-maker, thus facilitating adoption of innovation (Koebel et al., 2003, cited in Koebel & Cavell, 2006, p.3), while larger firms might tend to be more reliant on extant practices and resistant to change (Koebel & McCoy, 2006, cited in Koebel & Cavell, 2006). Further, to some extent, the trend for larger builders to be more innovative is counterbalanced by their

responsibilities to shareholders and other investors not to compromise on quality, safety and profitability, as well as the fact that their much larger output makes them more vulnerable to compounding of any defects resulting (Koebel and Cavell, 2006).

Consequently, innovations are most likely to be adopted by volume builders if they improve production processes, result in cost savings, or reduced call-backs or other liabilities (Hudson & Cantrell, 2004, cited in Koebel & Cavell, 2006).