The double-edged sword of endorsing external ideas: Juggling competitive advantage and organizational compatibility concerns

Abstract

In spurring employee innovation, organizations often encourage employees to seek creative ideas from external sources. However, research findings on managers’ receptivity to external ideas are mixed. While some work suggests that managers are favorable towards external ideas, other studies indicate that they often exhibit a “not-invented-here” syndrome, a negative attitude towards external ideas. Drawing from Dynamic Capabilities Theory and integrating it with the managerial creativity endorsement literature, we develop a dual-pathway model that argues that there are competing considerations managers face when evaluating external creative ideas. Using a field experiment as well as multiple lab studies, we show that managers consider both the risk of being outcompeted by other organizations if they do not adopt these ideas, as well as the risk of incompatibility with existing systems within their organization if they do implement them. While the former makes managers more receptive to external ideas, the latter risk makes them averse to implementing them. We further demonstrate managers’ perceptions of technological turbulence in the environment as a crucial boundary condition that amplifies the tension between these risks. We discuss the theoretical and practical implications of our findings.