AIM Research Working Paper Series:

Despite its importance as a potential source of variation within industries, little is currently known about the antecedents of new business ideas in large, established firms. While a number of organization and management literatures address, tangentially, issues pertaining to this topic, none examines it directly. We aim in this paper to contribute to building a body of research that directly addresses idea generation in corporate contexts. From a conceptual standpoint, we propose a theoretical framework of the roles corporate context (viewed from an attentional and information processing perspective) and individual knowledge play in influencing the nature of new business ideas generated by an organization’s members. In so doing, we put forward the concept of new business idea sets: the complete stock of new business ideas a person is considering at any given time. By characterizing idea sets along a number of generic dimensions, we contend that new insights into, and a more comprehensive understanding of, corporate idea generation is enabled. We then develop a set of hypotheses regarding commonalities and differences between the contextual and knowledge-based antecedents of idea set novelty (the novelty of a person’s ideas at a given time) and idea set volume (the quantity of ideas a person is considering at a given time). AIM Working Paper Series: 058-October-2007 Copyright© Julian Birkinshaw and Susan A. Hill, 2007 4 From an empirical standpoint, we develop and test our theoretical devices and propositions in a multi-stage field study, comprising: pilot research with 20 knowledge workers in a multinational FMCG company; a survey of 388 knowledge workers across 3 large, multinational organizations (with supplementary supervisory and top management team data); and longitudinal case studies of 22 knowledge workers observed over a 12-month period. In the empirical test described in this paper, using our primary survey data, we anticipate and find that different knowledge processes underlie the novelty and volume of ideas corporate knowledge workers generate. While idea set novelty is primarily accounted for by equivocality-reducing processes of knowledge transformation, idea set volume is explained rather by knowledge combination processes. Furthermore, exposure to a broad range of stimuli enables both many as well as highly novel new business ideas, while broad individual work experience is only associated with the volume of ideas generated. These findings highlight the value of integrating and extending the constructs and propositions of extant literature streams to generating new understandings of corporate idea generation. AIM Working Paper Series: 058-October-2007 Copyright© Julian Birkinshaw and Susan A. Hill, 2007 5 INTRODUCTION A basic precursor to value-creation and economic development is the perception by economic agents of opportunities for economic gain (Moran & Ghoshal, 1999). Without ideas for new resource combinations (Schumpeter, 1934, 1950), new business activities would not be entered into and dynamism in markets would need to be explained exogenously. Despite its centrality to economic processes, however, relatively little is currently understood about the generation of new business ideas (Shane, 2000, 2004). The more typical focus has been on the exploitation of sources of ‘variation’ (Campbell, 1969; Staw, 1990). This is particularly true of ideas in large, established companies. Fortuitously however, a number of developments indicate that the time may be ripe for investigating idea generation in corporate contexts. Prominently, there is burgeoning interest in innovation and entrepreneurship among both small and large firms. Responding to increased demand, exponential growth is occurring within the scholarly field of entrepreneurship, in which an opportunity-centred definition of entrepreneurial phenomena has recently gained prominence (Shane, 2000, 2003; Shane & Venkataraman, 2000). This has encouraged a new generation of scholars to investigate processes related to opportunity recognition and idea generation, albeit in primarily independent (i.e. non-corporate) contexts. Recent advances in the strategy field too may help advance our understanding of idea generation in large, established firms. Most notably, the knowledge-based view (KBV) of the firm “models organizations as knowledge-bearing entities that leverage knowledge for competitive AIM Working Paper Series: 058-October-2007 Copyright© Julian Birkinshaw and Susan A. Hill, 2007 6 advantage” (Kazanjian, Drazin, & Glynn, 2002). Informed by this perspective, a stream of research on technological search processes (e.g. Katila & Ahuja, 2002; Rosenkopf & Nerkar, 2001; Stuart & Podolny, 1996) has contributed to advancing understanding of how local search processes may constrain the potential for new knowledge generation, and associated innovation. Also, a small but growing body of research has delved into the impact of individual and contextual factors on creativity in organizations in an increasingly sophisticated manner (e.g. Amabile, 1988; Amabile et al., 1996; Oldham & Cummings, 1996; Shalley, 1991, 1995). Together these perspectives may provide a viable theoretical platform from which to build a more comprehensive, systematic and context-sensitive theory of idea generation in established companies. This paper addresses the topic of where and how new business ideas originate in large, established firms. More specifically, it examines the following research question: how do depth and breadth of individual knowledge and context impact the generation of ideas by knowledge workers in large, established firms? From a conceptual standpoint, we propose a theoretical framework of the roles corporate context (viewed from an attentional and information processing perspective) and individual knowledge play in influencing the nature of new business ideas generated by an organization’s members. In building this framework, we explore a number of conceptual hurdles needing to be overcome, including how to define and model new business ideas and their contextual and knowledge antecedents. We introduce conceptual devices that we believe facilitate overcoming these (conceptual) hurdles, including the notion of an individual ‘idea set’ as a fruitful AIM Working Paper Series: 058-October-2007 Copyright© Julian Birkinshaw and Susan A. Hill, 2007 7 unit of analysis, and a range of dimensions along which new business ideas and idea sets can be meaningfully classified. From an empirical standpoint, we develop and test our theoretical arguments in a multi-stage field study, comprising pilot research with 20 knowledge workers in a multi-national FMCG company; and a survey of 388 knowledge workers across 3 large organizations. The paper is in five sections. First, we sketch the nature of the gap regarding idea generation in large, established companies that we see in extant literature. We review literatures on technological search, entrepreneurial opportunity recognition and organizational creativity, identifying where they help inform our understanding of new business idea generation in corporations, and where their limitations lie. The second section briefly introduces a conceptual device that we believe aids understanding and empirical investigation of this topic, namely our ‘idea set’ unit of analysis. In the third section, we outline our overall theoretical framework and our theoretical propositions regarding a subset of the constructs examined in the broader research project. In the fourth section, we describe the research methodology. In the fifth section we describe and discuss the findings.