The innovation literature emphasizes that incremental innovations do not differ much from existing product portfolios and therefore routine procedures and capabilities are sufficient to instigate this type of innovation (Colarelli O’Connor 1998; McDermott and Colarelli O’Connor 2002). However, many incumbent firms still struggle with incremental product innovation efforts despite the numerous studies suggesting solutions to overcome potential barriers (Cooper 1999; Benders and Vermeulen 2002). Occasionally, they are capable of successfully developing incremental innovations, which means that the innovation is developed and launched onto the market rapidly and smoothly. The main reason for this variation in success is not only due to a superior organization of projects or a more sophisticated use of the available tools to develop new products, as has often been suggested by the new product development literature (e.g. Cooper 1999; Belliveau et al. 2004; Kahn 2004). We have argued that institutional forces have a strong impact on the innovative efforts of incumbent firms. We claim that an institutional perspective has the potential to complement the existing innovation literature, because it uncovers some of the underlying reasons for the (lack of) innovative behavior of organizations. In this chapter we develop a framework of innovation in which the institutional components enable or obstruct innovation. In line with Greenwood and Hinings (1996) we also believe that institutional theory holds much promise for explaining change and innovation. The innovation literature can benefit from the valuable insights developed in the institutional literature. The model we develop below is aimed at explaining the occurrence or lack of innovation in established firms. We build our explanation in two parts. First, we briefly revisit the institutional forces that were described in Chapter 7. We demonstrate their impact and highlight the interaction between various forces that has a reinforcing effect on the potential for innovation. Second, we use a set of institutional components that work as precipitating or enabling dynamics (cf. Greenwood and Hinings 1996). Together these components provide an indication of the
potential for innovation in established firms. For these firms it is most likely possible to develop a new product every once in a while, but to reach a level of sustained innovation will be a daunting task.