Firm growth and innovation: towards a typology of innovation strategy

Abstract

This article discusses innovation across the firm's life cycle. By discussing how firms’ innovation decisions change over time and across the different stages of firm growth, we add to the literature on innovation and strategic management by proposing a typology of innovation strategy. In this original contribution, innovation strategies are categorized in terms of the type of innovation (product and process) and its degree of novelty (incremental and radical). Crossing these decisions, we identify four innovation strategies: product development, learning by experience, discovery, and restructuring. In our integrative view of technological innovation and firm growth, we propose that each of the four strategies develops over the firm's growth stages (start-up, expansion, maturity, diversification, and exit), make a conceptual contribution to our knowledge on innovation strategy, and suggest further research on this topic.