In the shadow of innovation
Unintended consequences, their antecedents and how to manage them
By
Stefan Faber
(s3144852)
University of Groningen Faculty of Economics and Business Duisenberg Building, Nettelbosje 2 9747 AE Groningen, The Netherlands
Supervisor: Dr. W.G. Biemans Co-assessor: Dr. F. Noseleit
Date: 24-06-2019 Word count: 10.124
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Abstract
Purpose – This paper creates an overview of the existing literature on the consequences of
innovation. A consolidation of the fragmented and sometimes ambiguous literature leads to definitions and a clear categorization of consequences of innovation and related terms. Antecedents of unintended consequences of innovation are proposed, and methods to manage unintended consequences in an organization are explored.
Approach – The research methodology includes a systematic literature review combined with
semi-structured interviews with innovation managers of various industries and companies.
Findings – A framework of consequences of innovation is given. The environment,
stakeholders & adoption, innovation type, and decision making are proposed to be antecedents of unintended consequences of innovation. Furthermore, several methods that help in managing unintended consequences are explored, which include: rules & regulations, escape routes, stakeholder engagement & communication, brainstorming, step-by-step design, and testing grounds.
Value – Findings help in better explaining and understanding the (unintended) consequences
of innovation. Consolidation of previous research helps researchers gain a deeper understanding of this topic. The antecedents and management methods help managers in identifying both threats and opportunities of unintended consequences of innovation.
Keywords - Unintended, Unexpected, Undesirable, Outcomes, Consequences, Innovation,
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Table of content
1. Introduction ... 5
2. Methodology ... 8
2.1. Data collection – systematic literature review ...8
2.2. Data collection - interviews ... 10
2.3. Data analysis & synthesis ... 11
3. Results ... 12
3.1. Descriptive Analysis...12
3.2. Consequences of innovation ... 14
3.2.1. Anticipated vs. unanticipated consequences ... 14
3.2.2. Intended vs. unintended consequences... 15
3.2.3. Desirable vs. undesirable consequences ... 15
3.2.4. Direct vs. indirect consequences ... 15
3.2.5. Framework consequences of innovation ... 16
3.3. Antecedents of unintended consequences ... 18
3.3.1. Environment ... 18
3.3.2. Stakeholders & adoption ... 19
3.3.3. Decision making ...21
3.3.4. Type of innovation ... 24
3.4. Coping with unintended consequences of innovation ... 27
3.4.1. Rules and regulations ... 27
3.4.2. Escape routes ... 28
3.4.3. Stakeholder engagement & communication ... 29
3.4.4. Brainstorming ... 30
3.4.5. Step-by-step design ... 31
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4. Discussion and conclusion ... 34
4.1. Theoretical contributions ... 34
4.2. Managerial implications ... 36
4.3. Limitations and future research suggestions ... 37
4.4. Concluding remarks ... 39
References ... 40
Appendix 1: Systematic literature review search string ... 44
Appendix 2: Systematic literature article overview ... 45
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1. Introduction
One of the most impactful innovations in the 21st century has been the smartphone, with the rapid diffusion of this technology in the last decade it has impacted day-to-day life in more than one way. In 2018 more than 3 billion people owned a smartphone, a number which is only expected to keep increasing (Newzoo, 2018). Instant communication, web surfing, cameras, entertainment, productivity, and GPS are just a few of the extensive possibilities of the technology. However, apart from the obvious advantages, several disadvantages can also be observed. In recent years, smartphone usage is linked to reduced social interactions (Dwyer, Kushlev & Dunn, 2018), health issues like eye strain (Long, Cheung, Duong, Paynter & Asper, 2017), increased distraction (Gill, Kamath & Gill, 2012) and increased stress (Samaha & Hawi, 2016).
Generally, research on innovation focusses mainly on the successes and benefits of innovation, but as the above anecdote shows this is not always the case, unintended consequences of innovation also exist. An important reason of why unintended consequences of innovation is an under-researched phenomenon is due to a pro-innovation bias, were innovators within an organization and scholars often fall for a “new is better” kind of thinking, assuming that innovation will have positive effects (Rogers, 1983; Sveiby et al., 2009).
It is important to note that, although I provide a negative example at the start, unintended consequences of innovation are not limited to be negative by definition, and positive unintended consequences also exist. An example of this, related to the previous example, is that scientists in medicine are able to detect diabetes relatively reliable using readily available smartphone applications and an algorithm. By doing so, an estimate of millions of unsuspecting people with diabetes can be encouraged to see a doctor and get treatment. Early treatment can prevent health consequences such as kidney problems, eye problems, heart diseases and strokes (Avram et al., 2019).
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also commonly used in describing outcomes of innovation. And this is exactly where the problem lies; the classification and terminology related to these terms. As different authors attach varying meanings to these terms, ambiguity is created, which could lead to several different interpretations of said terms. This ambiguity can, in turn, lead to research results being interpreted differently, indicating the academic motive for this research. Let me provide two examples: One of the landmark publications in the social sciences, with more than thirty thousand citations, is Social Theory and Social Structure by Merton (1968) where he uses the terms unanticipated consequences and unintended consequences interchangeably, as synonyms. Furthermore, Norton (2008) in The Concise Encyclopedia of Economics states that ‘The law of unintended consequences, often cited but rarely defined, is that actions of people -and especially of governments- always have effects that are unanticipated or unintended.’. And while both terms used by the authors, unintended- and unanticipated consequences, seem similar at a first glance, let me illustrate why they are not.
Intended Unintended
Anticipated A B
Unanticipated D
Table 1: Consequences of purposive action (De Zwart, 2015)
Table 1 shows in essence that unintended consequences can both be anticipated (B) and unanticipated (D), however, intended consequences can never be unanticipated and vice versa. And while A and D are the most obvious consequences, B is also included in the definitions. Think of pharmaceutical companies that develop a certain kind of medicine, this medicine can have unintended side effects, however using trials the pharmaceutical company can still anticipate these consequences. By weighing the harms versus the intended benefits, they can decide whether to bring the medicine to the market or not.
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organizational innovation. One motivation for this research is that it seems reasonable to think that innovations with negative unintended consequences can be less successful than expected, or even fail. While, in contrast, innovations with positive unintended consequences could perform better than expected, although research in this area is limited (e.g. Olson, Slater & Hult, 2005; Simpson, Siguaw & Enz, 2006).
The goal of this research is threefold. Following a systematic literature review, I first create an overview of the existing literature on unintended consequences of innovation. In turn, a clear definition and categorization of the different terms are possible. Lastly, by means of a combination of the literature and interviews, propositions and a conceptual framework regarding antecedents and management methods of unintended consequences are given. In the end, the following research questions will be answered:
1. How can the consequences of innovation be defined and categorized? 2. What antecedents of unintended consequences can be found?
3. How can unintended consequences of innovation be managed to increase innovation performance?
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2. Methodology
As stated in the introduction, the meaning of unintended consequences and its related terms is ambiguous. In order to gain a comprehensive and objective, unbiased overview of the phenomena a systematic literature review is conducted (Crossan & Apaydin, 2010). This review is conducted following the steps proposed by Tranfield, Denyer & Smart (2003), who adopted this now widely used methodology from medical science to the field of management. Because a systematic literature review reports the full process openly, the transparency, clarity, and reputability are improved (Pittaway, Robertson, Munir, Denyer & Neely, 2004), making it a high-quality and efficient method for identifying and evaluating extensive literature (Tranfield et al., 2003). According to Crossan & Apaydin (2010), who also followed Tranfield et al. (2003), the process consists of three parts; data collection, data analysis and data synthesis.
2.1. Data collection – systematic literature review
First, a search through the electronic database of EBSCOhost Business Source Premier using various keywords and synonyms relevant to the phenomena was conducted. These search terms follow some introductory readings in the topic that came up first after searching on Google Scholar for ‘unintended consequences of innovation’, and important citations used by those papers (e.g. Merton, 1936; Rogers, 1983; Simpson et al., 2006; Sveiby et al., 2009; De Zwart, 2015). These search terms were entered using Boolean search operators in order to connect, combine or separate the keywords. An example of a search term is ‘(Unintended OR intended) AND (consequence* OR outcome*) AND (Innovation)’, an overview of the full list of search terms is given in Appendix 1. The search was conducted within the full text of the articles.
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Thereafter, the total number of articles was further reduced by first removing duplicates followed by selecting and excluding papers on the relevance of their title and their abstract. This process led to another 612 papers being excluded due to irrelevance, and 17 due to being duplicate, leaving 104 papers. Thereafter, the number of citations of the articles was assessed, as they serve as a realistic vote of the paper’s contribution towards knowledge accumulation and development (Saha, Saint & Christakis, 2003; Podsakoff et al., 2005; Crossan & Apaydin, 2010). A minimum of 5 citations per year, from the year after the release date up-until 2018 was chosen as cut-of-point, removing the papers that did not meet this criterion. This is in line with several authors (e.g. Crossan & Apaydin, 2010; Torugsa & O’Donohue, 2016) and narrowed the total down to 56 papers. A summary of the full selection and exclusion process is also shown in figure 1.
Figure 1: Systematic literature review article exclusion process
The next step was the full article analysis, which included reading the relevant parts of all remaining articles. During this process, another 14 articles were discovered as not-relevant and thus removed from the selection. This was mostly due to some articles mentioning outcomes or consequences only briefly in the main text, with only very generic examples and without any form of classification in intention, anticipation or desirability (e.g. Lee, Soutar & Louviere, 2007; Hunter & Perreault Jr, 2007; McGrath, 2005; Neuman, 2018).
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when the citations showed useful for the systematic literature review, were not already captured in the previous steps and matched the selection criteria, were added to the selection. This process added 10 articles, leaving a total of 52 articles in the final selection. An overview of these remaining articles is given in appendix 2.
2.2. Data collection - interviews
In order to link the theory to practice, four interviews were held with innovation managers from various companies and institutions across varying industries in the north of the Netherlands. These professionals were found using LinkedIn, performing the search ‘Innovation manager Groningen’, the first three pages of results were screened on the current job position, company and city. A list of interviewees is shown in table 2. Due to limitations in time, and the scope of this research being mainly a review of the literature, the number of interviews was limited.
The interviews were focused on innovation of the current company and the individuals’ innovation portfolio. Furthermore, the interviews were conducted in a semi-structured way, an interview protocol was made beforehand with several key questions and follow-up questions, but some room was left to continue on interesting ideas or responses in more detail (Gill, 2008). The same protocol was used for all interviews, which is added in appendix 3.
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Interview Job position Industry Date & location
1 Innovation manager Private insurance 10-05-2019, company HQ, Zwolle 2 Innovation & strategy
manager, IT
Municipality 13-05-2019, municipality, Emmen
3 Innovation manager Health insurance 21-05-2019, company HQ,
Leeuwarden 4 Project & Innovation
manager
University ICT & Research
22-05-2019, Centre for IT (CIT), Groningen
Table 2: Overview of interviewees.
2.3. Data analysis & synthesis
In order to properly extract relevant data out of the selected articles, a thorough analysis is necessary. First, the sample of the selected articles was analyzed descriptively on their level of analysis, research methodology and discipline. This is in line with Crossan & Apaydin (2010) and allows for an overview of the selected articles sample and its characteristics.
Because the goal of this paper is to create an overview of existing literature and to consolidate this in a conceptual framework and a clear categorization, this research is methodologically limited to qualitative analysis. This is underlined by a limited number of quantitative studies in the sample of the selected articles. The articles were screened and notes were written down for each article and the input it could have for the results section.
Next, the summaries of the interviews were compared and color-coded by hand, to look for matches and mismatches between interviews and between the interviews and the articles of the systematic literature review.
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3. Results
In this section, I first provide a descriptive analysis of the literature sample following the systematic literature search. This is followed by a review of said literature to consolidate towards clear definitions and categorization. Thirdly, I combine both findings from the literature and the interviews to provide managerial methods for coping with unintended consequences.
3.1. Descriptive Analysis
As can be seen in figure 2 the 52 final articles of the systematic literature review, presented in an overview in appendix 2, show a relatively normal distribution in the years they were published. The negative skew suggests that most articles of the review were published in more recent years, which is good for the actuality of the results.
Figure 2: Systematic literature review articles distribution per 5 years
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The dataset is also spread out across several different disciplines, as can be seen in figure 3. One-third of the articles were published in a journal focused on information systems or closely related, like software or ICT. The management and innovation disciplines followed with eight and seven papers respectively.
Figure 3: Systematic literature review articles distribution across discipline
Furthermore, 36 out of the 52 articles, or 69 percent had a qualitative research approach. The other remaining 16 research papers were conducted following a quantitative approach. As shown in figure 4, most of these articles focused on a macro level of analysis, taking an approach that was on a national, cross-industry or global level. Eighteen articles focused only on a particular industry or company, while the remaining four articles took a micro approach on an individual level.
Figure 4: Systematic literature review articles
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3.2. Consequences of innovation
From the introduction, it became clear that a lot of inconsistency exists in the term unintended consequences of innovation and its related terms. This section will focus on a consolidation of the literature towards definitions and a framework.
Seminal work on the topic of (un)intended consequences was ‘The unanticipated consequences of purposive social action’ written by Merton in 1936. For this and following research an often used definition for consequences is “those elements in the resulting situation which are exclusively the outcome of the action, or of an interplay between the action and the objective situation, i.e., those elements which would not have occurred had the action not taken place.” (Merton, 1936, p. 895). Rogers (2010) links this definition to innovation: “the changes that occur to an individual or to a social system as a result of the adoption or rejection of an innovation” (p. 49). In this research a combination of both will be used as the definition for consequences of innovation; those elements which would not have occurred had the action(s) of innovation or the adoption or rejection of the innovation not taken place. Important is to keep in mind that this broad definition recognizes that the consequences of innovation become not only apparent after an innovation is diffused, but also during the process; a product innovation has consequences for the customers when bought, but it can also have consequences for the organization already during development. These consequences of innovation can be further categorized. Merton (1936) distinguishes between anticipated vs. unanticipated consequences and intended vs. unintended consequences. Rogers (1983) also looks at anticipated and unanticipated consequences but also adds desirable vs. undesirable consequences and direct vs. indirect consequences. A consequence of innovation can always be categorized in all four categories.
3.2.1. Anticipated vs. unanticipated consequences
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action that the actor does not expect in advance. Anticipated consequences “are changes due to an innovation that are recognized [beforehand] […] by the members of a social system.” (Rogers, 1983).
3.2.2. Intended vs. unintended consequences
Intended consequences are recognized and anticipated by a member of a social system (Rogers, 1983). Furthermore, intended consequences can be defined as “the objectives of the action, the targets toward which it is oriented, and the motives that stimulate it” (McKinsey & Scherer, 2000, p. 735).
3.2.3. Desirable vs. undesirable consequences
Understanding the range of potential effects of innovations, the factors that contribute to them and the connections between them is crucial for success. As those consequences are not necessarily positive, benefits may be non-existent and the effects can even be negative (Silver, Markus & Beath, 1995). Desirable consequences are functional, positive, effects of innovation to an individual or a social system. Oppositely, undesirable consequences have a dysfunctional, negative, effect on the individual or social system (Rogers, 1983).
Consequences, intended or not and anticipated or not, often have both positive and negative, or desirable and undesirable consequences which often are not fully considered during the early stages of development (Kossek, 2016). To some degree what is desirable or undesirable is subjective, and this can thus differ depending on the viewpoint that is taken.
3.2.4. Direct vs. indirect consequences
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innovation focused on new product development is the new product, while an indirect consequence is the learning effects that the company has during the process.
3.2.5. Framework consequences of innovation
Combining the above categorizations it is possible to come up with a framework that illustrates the relationships between categories. This framework is shown in figure 1.
Figure 5: Framework consequences of innovation (based on Sveiby, 2009).
A few things are notable in figure 5. First, unintended consequences can both be desirable and undesirable while some articles in the dataset assume that unintended consequences are negative by definition (e.g. Calista & Melitski, 2007; Holland, Hughes, Knittel & Parker, 2017; Musial, 2017). Secondly, the directness of a consequence does not have an impact on the outcome of the tree diagram, as the categorization is not affected. Thirdly, unanticipated consequences are per definition also unintended consequences as one cannot have intentions with something he or she does not anticipate beforehand. However, these consequences can still be positive and negative. And lastly, connecting to the third point, intended consequences are per definition also anticipated while anticipated consequences can also be unintended. Think of a medical doctor prescribing a certain drug to a patient, some side-effects can occur which are anticipated but unintended.
Consequences of Innovation. Direct/ Indirect Anticipated (or expected / foreseen)
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To illustrate the various outcomes that the tree diagram of figure 5 has with practical examples, table 3 is given. This table contains examples from both the interviews as well as the articles from the systematic literature review. However, for the sake of simplicity, as there are twelve possible outcomes (the six options at the end of the tree diagram times two for either direct or indirect consequences), only a mixture of direct and indirect consequences is given.
Category (In)direct Examples
Anticipated - intended - desirable
Direct An innovation within digital health, here an IT system was developed that intended to secure the privacy of patients while simultaneously allowing valuable data to be shared between medical professionals and with researchers in medicine and pharmacy. The program met all desirable and intended goals. (interview 4, project & innovation manager, CIT).
Anticipated - intended - undesirable
Indirect In new product development, when designing a prototype using computer-aided design (CAD) software, there is an increased possibility to postpone important decisions and create multiple parallel designs. While this consequence is anticipated and intended due to the flexibility it creates, it is undesirable from a project management point of view due to the reduction in efficiency. (Fixson & Marion, 2012) Anticipated - unintended
- desirable
Indirect At a health insurance company, when they innovate, often learning effects within the organization occur. Certain capabilities important for innovation such as creativity, how we handle information and knowledge flows [absorptive capacity] or external networks are developed. While this is anticipated, this is often not the intended goal to proceed with the innovation. However, it is desirable for them as it allows for continuous improvement. (Interview 3,
Innovation manager, health insurance) Anticipated - unintended
- undesirable
Indirect Innovative advancements in Biometric Encryption (security using human characteristics e.g. iris, fingerprints or DNA) has some privacy consequences as data is stored and can be analyzed. A company developing this technology did anticipate this but still recognized the desirable consequences to outweigh this undesirable effect. (Cavoukian, Chibba & Stoianov, 2012)
Unanticipated - unintended - desirable
Indirect A new way of working called teleworking, when employees do not go to a central office building but work from home, has led to employees exercising more and visiting a doctor more often and thus being healthier. This is due to the time saved on daily commutes and more flexibility to schedule those activities. (Kossek, 2016)
Unanticipated -
unintended - undesirable
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successful that almost no customers proceeded to buy the service. (Interview 1, innovation manager, private
insurance)
Table 3: Examples of various categories of consequences.
3.3. Antecedents of unintended consequences
Several factors are found in the literature and interviews that affect whether a consequence is (un)expected and or (un)intended, they are given in this section.
3.3.1. Environment
One reason why there are both expected and unexpected consequences, according to Markus & Robey (1988), is found in ‘the emergent perspective’ which states that consequences of information technology -an innovation- emerge unpredictably from social interactions. They quote Pfeffer (1982) in explaining that: “Because participation in organizational decisions is both segmented and discontinuous, because preferences develop and change over time, and because the interpretation of the results of actions is often problematic, behavior cannot be predicted a priori either by the intention of the individual actors or by the conditions of the environment.”(p. 9). Sterman (2001) also underlines the unpredictability and uncontrollability of the environment.
Mackay & Chia (2013) demonstrate that not only intended action leads to unintended consequences, but that environmental circumstances are also an important factor. As the environment can sometimes be “chaotic, complex, fluid, sometimes random, frequently messy, and often surprising in its emergence […] it plays a vital role in shaping the organizational destinies.” (Mackay & Chia, 2013: p. 225). They argue that the more the environment can be owned, has a predetermined structure or is already well-configured, the lower the probabilities for unintended consequences are. Thus, applying the findings of Mackay & Chia (2013), an organization innovating in an environment that is chaotic, fluid or complex should encounter more unexpected and unintended consequences of innovation.
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Proposition 1B: innovating in an environment that is fluid will lead to more unintended consequences.
Proposition 1C: innovating in an environment that is complex will lead to more unintended consequences.
3.3.2. Stakeholders & adoption
Hall & Martin (2005) underline the importance of stakeholders for consequences of innovations; “Stakeholder analysis is crucial for radical technology development because it may have widespread social and environmental implications that are often controversial” (p. 276).
The consequences of innovation can be experienced differently by various parties, and they trigger equally varying and complex responses from those parties (Beaudry & Pinsonneault, 2005). From one person to another the consequences of an innovation can differ, they are not necessarily uniform. An innovation that enriches or empowers one person may deskill or disempower someone else. For instance, a new IT system might improve profits for the company while simultaneously reducing the work-life quality of employees (Silver, Markus & Beath, 1995). Sergeeva, Huysman, Soekijad & Van den Hooff (2017) add that other people than stakeholders directly targeted by the innovation can also be affected, they describe that ‘onlookers’ can be drawn into a technology when cues are given off. They provide an extreme example of medical employees using an iPod Touch during operations, and by doing so giving off cues that they are not paying attention, this, in turn, triggered a response by onlookers when something important happened like yelling to pay attention when a patient started to bleed a lot. In other words, technologies that are used by actors can act as an activator, triggering and incentivizing other actors to also engage with the technology without them having a priori intentions on their part.
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decision making but was consequently also used for improving customer relations, for the good of the company. But the opposite can also happen, think of an executive information system that is used to intimidate lower positions in the organization, leading to reduced commitment and stifling creativity (Silver, Markus & Beath, 1995).
User ability and perceived job fit also play a role in the consequences of an innovation. Following Thompson, Higgins & Howell (1991), who looked at consequences and adaption of PCs in the 1980s. When users did not have the ability to properly use a PC the consequences of this innovation were different than when users did possess the proper skills. And when users perceived that PC’s could enhance the performance of their job, the consequences of PC technology were consistently more positive than when they did not. As the intention of introducing PC’s in the workplace was to improve performance, bad adoption of PC usage due to missing abilities or low perceived job fit were unintended consequences (Thompson, Higgins & Howell, 1991). This perceived job fit is also in line with empirical findings of Agarwal & Prasad (1998), as users perceptions of a new IT in terms of relative advantage, ease of use and compatibility influence their intentions to use the new IT. User perceptions contributed to the consequences, both intended and unintended, of new IT. Looney, Valacich, Todd & Morris (2006) have outcomes in line with previously mentioned studies (e.g. Thompson, Higgins & Howell, 1991; Agarwal & Prasad, 1998) however they take a different approach. They link self-efficacy, which refers to a perception of one’s ability to organize and execute courses of action to accomplish a particular task, to outcome expectancies, which capture the perceived likelihood that favorable consequences will occur after one has acted. This implies that functional and technical self-efficacy judgments independently and collectively shape and influence consequences. Take for example a new financial online investment technology that can make investors exaggerate their capabilities, in turn they might have increased expectancies of financial gain, this can then lead to unintended consequences emerging when the technology does not meet expectations (Looney et al., 2006).
This importance of stakeholders and adoption was also mentioned in the interviews:
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it’s other parties that need to start using it in a useful, valuable way. That’s the most difficult. (Interview 4, project & innovation manager, CIT)
We can have a nice theoretical overview of an innovation on paper, but in the end the customer decides if something becomes successful [and thus meets the desired outcomes], and that is something we have to test and adapt to. (Interview 1, innovation manager, private insurance)
Thus, the better all stakeholders of an innovation can be mapped out, the better the communication with said stakeholders is and the better an innovation and the use-case can be signaled to the stakeholders, the less likely it is that unexpected and unintended consequences should occur.
Proposition 2A: innovating when stakeholders are difficult to identify will lead to more unintended consequences.
Proposition 2B: innovating when stakeholders are difficult to communicate with will lead to more unintended consequences.
Proposition 2C: innovating when stakeholders are difficult to signal to will lead to more unintended consequences.
3.3.3. Decision making
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often complex as there can be multiple parties involved. This can lead to decisions being made after bargaining and negotiation between parties, rather than a scientific and objective process (Grabowski & Roberts, 1997). One interviewee mentioned:
Decision making plays a large role for us, as we are a city council we are elected every four years. This has a huge impact on how we make decisions. As innovation or new IT projects that cost a lot of money now but reap benefits after several years are not that popular, but in my opinion necessary if you want to achieve something. This makes that most innovations are incremental. To go along with that is the bureaucracy within the municipality, decisions need to pass multiple layers, often also several parties are involved, making my job more difficult. (Interview 2, Innovation & strategy manager, municipality)
The more an organization can rely on owning a choice, i.e. making stable choices that are deliberate and go after a sequential goal, the lower the probability for unexpected or unintended consequences is (Mackay & Chia, 2013). Thus, the more an organization can rely on high-quality information, the fewer parties that are involved and the more control there is in pursuing stable and clear goals, the less unexpected and unintended consequences there should be.
Proposition 3A: innovating while decision making relies on low-quality information will lead to more unintended consequences.
Proposition 3B: innovating while decision making relies on more involved parties will lead to more unintended consequences.
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Furthermore, decision making can rely on previous decisions. According to Strong et al. (2014) affordances within an organization leads to action, which is the realization of potentials, in turn, these actions will lead to actualized immediate concrete outcomes. Between these actions and outcomes is a feedback loop, as the outcomes can lead to new or adjusted actions. In other words, if an organization innovates, the actions undertaken will in turn have outcomes, those outcomes will affect new actions. Tim, Pan, Bahri & Fauzi (2018) extend this model by looking at outcomes of the use of social media. They found that the use of social media had unintended consequences and that these affected the actions of actors. They found a feedback loop in their data: “the unintended consequences generated from the use of technology (ie, actions in actualizing technology affordances) will, in turn, provide feedback for adjusting the actions of actors and thus the uses of technology.” (Tim et al., 2018; p. 69). Several other authors also found this effect. Lapointe & Rivard (2005) studied the implementation of new IT systems in an organization and found that consequences, whether they were foreseen or not, occurred and that these consequences could change the next actions leading to new (other) consequences. Without feedback processes that link actions to its outcomes and consequences, yesterday’s solutions will remain today’s problems without improvement (Sterman, 2001). The process of a feedback loop was also described in interviews:
We work a lot in small steps, as we can’t predict the consequences of our innovations accurately. These small steps allow us to tweak a bit before we take our next small step. (Interview 4, project & innovation manager, CIT)
Our innovation projects usually consist of multiple rounds. We verify in-between in order to make follow-up decisions. (Interview 3, innovation manager, health insurance)
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Thus, due to a feedback loop, the more decisions can rely on information of consequences from previous similar decisions, the better one can expect consequences and the better one’s intentions become clear.
Proposition 3D: innovating while decision making does not rely on a feedback loop will lead to more unintended consequences.
3.3.4. Type of innovation
Other factors that can influence the consequences of an innovation are the novelty of the innovation (radical or incremental), whether the innovation follows technology push or market pull and the complexity of the innovation.
Radical or incremental innovation
Two common approaches within the field of innovation that differ in novelty are radical and incremental innovation. The focus of radical innovation is often disruptive, inventing products, business models or services that are new to the world, industry or company. While incremental innovation is focused more on improving existing products, services, and business models. According to Kuk & Janssen (2013), both the frontend approach (read: radical) and the backend approach (read: incremental) in service innovations have unintended consequences.
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negative consequences of the technology.” (Hall & Martin, 2005). Two interviewees mentioned something along the same lines:
I work mainly on short term innovations, that can be implemented quickly, and I inspire/facilitate innovation within the company by giving workshops. […] My colleague works more on innovation of the future, terms like blockchain, big data and Internet of Things and how those topics can affect or help us in the future. I think his job is a bit more abstract and for him it’ s even more difficult to predict outcomes vs. my innovations in the shorter term. (Interview 1, innovation manager, private insurance)
We work mainly on Horizon 2, which I would describe as new to us as health insurance company but not new innovation to the world. About 70% of our [innovation team of 3 FTE] time is dedicated to this. 25% of our time is dedicated to Horizon 1, improving current products and services. Due to the small team, only about 5% of the time is spent on Horizon 3, actually new technologies to the world. I think the more you go to Horizon 3 the more uncertain things become, and uncertainty does not really fit us as health insurance company. We need to be risk-averse. (Interview 3, innovation manager, health insurance)
Thus, the more radical an innovation is, the more difficult it becomes to predict the consequences of the innovation, and this leads to more unexpected and unintended consequences.
Proposition 4A: the more radical an innovation is, the more unintended consequences will occur.
Technology push or market pull
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technology is developed as a solution to that problem or to cater to that demand. However, this relationship was not found in any of the articles of the dataset.
In the Centre of Information Technology we work mainly with the newest technologies. Often times the use-case of them is not even really clear [Technology push]. We start with some ideas or technologies in which we see potency. Then we develop this a bit further and start accumulating as much knowledge as possible. Afterward, we will talk with other parties and search for potential use-cases. In my opinion, this comes with more risk, but it does suit us as most people here are scientists and researchers who like working the most leading technologies. I think with market pull you already have a better understanding of how people will react to an innovation and thus of the outcomes. For us, this is more uncertain and thus more unexpected things happen. (interview 4, project & innovation manager, CIT)
Thus, the more an innovation is the result of a technology push, the more unexpected and unintended consequences will rise.
Proposition 4B: the more an innovation is technology push, the more unintended consequences will occur.
Complexity
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Thus, the more complex an innovation is, the more difficult it becomes to predict consequences. More unexpected and unintended consequences will emerge.
Proposition 4C: the more complex an innovation is, the more unintended consequences will occur.
3.4. Coping with unintended consequences of innovation
Given the negative and positive impact unintended consequences can have on an organization, it is beneficial to explore management methods in dealing with them. Not only is it favorable to reduce negative unintended consequences, but it is also advantageous to the organization and the innovation to properly react to desirable unintended consequences. This section presents the various methods found in the data that deal with managing the consequences of innovation.
3.4.1. Rules and regulations
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Furthermore, negative unintended consequences can be reduced with properly enforced rules (Sojer, Alexy, Kleinknecht & Henkel, 2014). In their empirical research, they found that unethical behavior in new product development (software), which they describe as a negative consequence, was reduced when rules within the organization were in place and enforced. They also found that enforcement with punishment was more effective than stimulation with benefits. A third finding they had is that regulations from outside of the firm [laws] were even more effective in preventing unethical behavior, and thus unintended consequences.
Thus, rules and regulations can reduce the number of unintended consequences of an innovation when enforced. As the development of rules and regulations forces parties to think of the consequences of an innovation and the rules and regulations can serve in signaling intended use of an innovation.
3.4.2. Escape routes
Often times innovations are large projects with high stakes involved, think of jobs, money and reputation. Due to this, it is often difficult to stop with an innovation at a later stage, when undesirable consequences emerge. Decision makers in charge of the innovation can be too close to the innovation and rely too much on the success of the innovation, which could lead to irrational decision making. Take the next example:
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To deal with this situation, Grabowski & Roberts (1997) suggest providing safe areas and slack in the decision-making system “where decision makers can consider, off-line, the potential impacts of their decisions.” (p. 157). They cite Weick (1990), who called this ‘escape routes’ which include revocable actions, being able to pull the plug on projects and proposals without too many consequences in order to avoid the escalation of commitment in a losing cause. By having escape routes in decision making, it should become more possible to timely react to negative unintended consequences if they emerge.
Thus, by providing so-called ‘escape routes’, innovators within an organization can be incentivized to stop with an innovation at an earlier stage if undesirable unintended consequences occur. In turn, this can prevent further unintended consequences to occur.
3.4.3. Stakeholder engagement & communication
According to Hsieh, Rai & Xu (2011), an organization can also affect the consequences of new technologies [innovation] implemented internally by providing training to employees. They argue that often the consequences of for instance a new IT system within an organization are the result of the usage of the system by the employees. By providing training, the use of the system at a higher level is encouraged meaning more consequences become visible.
Similarly, McKinley & Scherer (2000) argue that with process or business model innovation, such as an organizational restructure, employees need to be persuaded to believe in the change as this improves the outcome (and thus also affects the consequences). “lower-level employees need to be convinced that restructuring can be administered to achieve espoused goals of flexibility, innovation, and improved financial performance while simultaneously preserving the capacity of business processes to generate output reliably.” (p. 748-749). This was also a topic in one of the interviews:
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Engagement with customers is also described in several interviews, the innovation manager at the private insurance company told that they sometimes engage in one-on-one conversations with customers to validate innovative ideas. The project & innovation manager at the Centre for IT mentioned that, starting from the early stages of product development, they will search for partners and potential business customers and actively engage them in the innovation process.
Communication is also part of this. As sometimes individuals make decisions, it is important that they indicate to others when they are uncertain about a decision. They must communicate the fact that they are uncertain so others can help to adress this uncertainty. Maybe someone has additional information or experience that helps with decision making. (Grabowski & Roberts, 1997).
Thus active engagement by stakeholders such as employees, customers and partners leads to fewer unintended consequences. As the stakeholders often experience a large part of the unintended consequences due to their usage, engaging closely with them allows both to identify consequences during the development process of the innovation and to provide training or instructions on how to use the innovation the intended way.
3.4.4. Brainstorming
Another method that can help in the reduction of unexpected and unintended consequences is to brainstorm in the early stage of development. This can be described as design-thinking: a method that can help in predicting outcomes of service and product innovations. Asking the right questions, involving stakeholders and the lack of early judgment are important.
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service before the actual introduction, and I think this helps us better predict the consequences of the innovation beforehand. (Interview 1, innovation manager, private insurance).
Cavoukian, Chibba & Stoianov (2012) also describe this as an effective method. In their case, which is also the 4th example described in table 5, they describe that in early stages some
important consequences of biometric encryption were uncovered. Due to that, it was possible to take these consequences into account in the design phase.
Thus, by brainstorming in the early stages of development of an innovation unintended consequences can be reduced as potential unintended consequences can be discovered at an earlier stage.
3.4.5. Step-by-step design
Another important factor that was found in all four interviews is that of step-by-step design, here are some examples:
We prefer to validate our innovations in the early stage by starting really small. This keeps the process clear. For instance, when we validated our service ‘legal aid on demand’ we started with only a handful of jurists that we introduced the service to and let them offer it, instead of rolling it out over all ~250 jurists. We were able to capture a lot more qualitative information this way, allowing for 1 on 1 conversations and feedback. We call this the ‘1-10-100 approach’, start with 1 to validate, form there grow to 10, followed by 100 and beyond. We often allow 6 months for this process, in the end, we need to see an actual business model that could be profitable within 3 years. (Interview 1, innovation manager, private insurance).
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rolled it out across multiple municipalities at once I think we would have had a lot more unforeseen problems. (Interview 2, Innovation & strategy manager, municipality).
An innovation trajectory must not be set in a blueprint beforehand. We take a more flexible approach. We start with an idea, talk to some people. Develop a plan and then talk to some potential partners. At every stage, we reflect and adapt when necessary. We make sure it is a fluid process. (Interview 3, innovation manager, health insurance).
Taking small steps and reflecting in-between, and adjusting when necessary allows for early recognition of potential undesirable outcomes of the innovation. In the early stages, it is often still possible to design the innovation in a way that circumvents their negative consequences.
3.4.6. Testing grounds
The last factor, which was mentioned in the interviews but not found during the systematic literature review, is the use of ‘testing grounds’ or ‘field labs’.
Testing grounds or field labs are for us either physical or virtual environments in which we can test our innovations. A physical field lab can be an actual lab with equipment, while a virtual testing ground is an online environment in which a copy of a particular software with dummy data is run. The main idea is that it is a low-risk, low-cost environment in which we can test things without there being actual consequences. By doing so, we get an idea for consequences in a real setting. (Interview 4, project & innovation manager, CIT).
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We have testing grounds internally within the organization. We allow a small group of employees to dedicate half a day a week to work on a new innovation. These are employees from all layers of the organization. They can work collectively on whatever they think is a high potency innovation, with a high level of freedom. (Interview 3, innovation manager, health insurance).
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4. Discussion and conclusion
“Our actions have consequences”
Kids are generally thought this valuable life lesson early on in their development; obey the rules and receive candy. If you don’t eat your dinner, you don’t get dessert. Innovation conducted by firms or individuals is a process and also consists of various actions, ranging from few to thousands. Thus, not only the finalized innovation has consequences, but also all the actions during the innovation process have their own consequences. This makes the topic very interesting to research, but also complicated.
4.1. Theoretical contributions
Previous research in innovation has mainly focused on positive consequences of innovation due to a pro-innovation bias among innovators within an organization and scholars (Rogers, 1983; Sveiby et al., 2009). But, as I have shown with various examples also unexpected, unintended and/or undesirable consequences of innovation exist. The terminology of consequences is sometimes ambiguous, as various authors attach different meanings to the terms (e.g. Merton, 1968; Calista & Melitski, 2007; Norton, 2008; Holland et al., 2017; Musial, 2017). By means of a systematic literature review, I developed consolidated definitions of the various terms and a framework of consequences of innovation.
Furthermore, following the systematic literature review and interviews with innovation managers, four groups of variables are proposed as antecedents for unintended consequences, together with one moderating variable. These propositions are shown in the conceptual framework, figure 6.
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Figure 6: conceptual framework unintended consequences and antecedents.
The environment, the stakeholders and their adoption, the type of innovation, and the decision making process show, according to the literature and the interviews, to affect the number of unintended consequences that occur with an innovation. Important to note is that these unintended consequences can both be desirable and undesirable.
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4.2. Managerial implications
From a practice point of view, several learnings can be taken from this research. First, innovation and the process of innovation comes with consequences, these consequences can be unexpected, unintended, and undesirable. It is important that the management of an organization is aware of this, as they can come with far-reaching consequences. Undesirable unintended consequences of innovation can have a negative effect on the focal innovation, the innovation performance, and the organization performance while desirable unintended consequences do the opposite and boost these factors. When unintended consequences emerge they provide a threat when undesirable, but an opportunity when desirable.
Several antecedents were uncovered and these imply that there are differences in the number of unintended consequences one can expect for an innovation, based on those factors. The most unintended consequences are expected for an organization that innovates in (1) an environment that is fluid, chaotic and complex with (2) stakeholders that are difficult to identify, signal to or communicate with, with (3) a type of innovation that is radical, technology push or complex, while (4) decision making relies on low-quality information, more involved parties, unstable strategic goals, without a feedback loop in place.
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Lastly, implementing testing grounds or field labs, in which innovations can be tested and adjusted on a relatively low scale, with low costs, also helps in better managing the unintended consequences of innovation.
4.3. Limitations and future research suggestions
This research comes with several limitations. First of all, the systematic literature search was conducted on one database, EBSCOhost Business Source Premier. Albeit this being the industry’s most widely used business research database, still, some relevant literature might have been omitted, especially regarding other disciplines. However, by carefully assessing references in the articles that did come up with the systematic literature review and including twelve additional articles this way, I estimate the probability that more articles would have severely altered my overall conclusion to be low.
Furthermore, the articles were selected with a requirement of 5 citations per year until 2018. This is an advantage to older articles, as those have had more time to generate citations, and a disadvantage to newer articles. This was done following several other authors (e.g. Crossan & Apaydin, 2010; Torugsa & O’Donohue, 2016).
Third, due to both time and scope limitations, the antecedents of unintended innovation consequences and management methods are covered and given in a broad conceptual model. Depth in further exploring these relationships is limited to the 56 final articles in the data set.
Fourth, the interviews I conducted were both limited in total number and limited to one employee in each company. The results of the interview are thus not generalizable and could be biased. Due to this, additional care was given to include the results of interviews only in addition to findings of the systematic literature review. They provided a nice way of contrasting the theory to practice and helped in both providing practical examples and better understanding the topics. The only exceptions are sections 3.4.6. (step-by-step design) and 3.4.7. (testing grounds) as these methods were mentioned in the interviews and not in the articles following the systematic literature review.
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up research. This, along with several other interesting topics for future research are described below.
• Individual relationships between the antecedents and unintended consequences mentioned in the propositions and conceptual model could be further explored in depth in the literature.
• The interviews in this research were conducted at one point in time, and the focus was on innovations of the past. This was done because it was only possible to have an understanding of all the consequences of an innovation after it was released/implemented. However, there is the possibility that the individuals do not fully remember their expectations of consequences they had beforehand. These might have been adjusted incrementally over time. Follow-up research, that has more time available, could be more longitudinal. By interviewing an individual in the early stages of development of an innovation and documenting their expected consequences, and again a while after an innovation is completed to document actual consequences. Followed by a comparison of those two, some potential bias is removed.
• As I only found 4 articles that I describe as being on a meso level (focussed on individuals or single company/case study), the longitudinal study described above can also provide better qualitative information on specific consequences and their occurrence.
• This can be followed by empirical research on the propositions and the management methods.
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4.4. Concluding remarks
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Appendix 1: Systematic literature review search string
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Appendix 2: Systematic literature article overview
Year Title Authors Journal Methodology Discipline Level of
Analysis 2018 Man Versus Machine: Resisting
Automation In Identity-Based Consumer Behavior
E Leung, G Paolacci, S Puntoni
Journal of Marketing Research
Quantitative Marketing Macro
2018 Digitally Enabled Affordances For Community-Driven Environmental Movement In Rural Malaysia
Y Tim, SL Pan, S Bahri, A Fauzi Information Systems Journal Qualitative Information Systems Meso
2018 Quality Predictability And The Welfare Benefits From New Products: Evidence From The Digitization Of Recorded Music
L Aguiar, J Waldfogel Journal of Political Economy
Quantitative Music Macro
2018 A Meta-Analytic Review Of Two Modes Of Learning And The Description-Experience Gap
DU Wulff, M
Mergenthaler-Canseco, R Hertwig
Psychological bulletin Quantitative Psychology Macro
2017 Through The Eyes Of Others: How Onlookers Shape The Use Of Technology At Work
A Sergeeva, M Huysman, M Soekijad, B van den Hooff
MIS Quarterly Qualitative Sociology Meso
2017 Unintended Consequences Of Carbon Policies: Transportation Fuels, Land-Use, Emissions, And Innovation
SP Holland, JE Hughes, CR Knittel, NC Parker
The Energy Journal Quantitative Energy Macro
2017 When Data Become Ubiquitous, What Becomes Of Accounting And Assurance?
AF Borthick, RR Pennington Journal of Information Systems Qualitative Information Systems Macro
2017 Designing (Artificial) People To Serve – The Other Side Of The Coin
M Musiał Journal of Experimental & Theoretical Artificial Intelligence Qualitative Artificial Intelligence Macro
2016 A Temporally Situated Self-Agency Theory Of Information Technology Reinvention
S Nevo, D Nevo, A Pinsonneault
MIS Quarterly Qualitative Innovation Macro
2016 Scaffolding: A Process Of Transforming Patterns Of Inequality In Small-Scale Societies
J Mair, M Wolf, C Seelos Academy of
Management Journal
