Informal Innovation: A Hidden Source of Improvement in Work and Organizations

Informal innovation, defined as the development and putting-into-use of novel solutions by non-R&D employees without prior formal approval from or subsequent revealing to superiors, has been recurrently observed in organizational research. But even as it is increasingly recognized that R&D is not the only plausible source of innovation inside organizations, informal innovation has yet to be systematically explored or theorized. We propose a theory of informal innovation based on analyses of prior literature and mixed-method, multi-site studies of innovation at the working level of two extreme-case organizations. We propose that informal innovation occurs as 1) employees personally experience problems that they believe are not recognized or prioritized by superiors; 2) some employees are able to develop solutions, essentially at no cost; 3) innovators face no benefits from revealing to superiors, but can share with peers with no or little effort. In the short term, informal innovation is likely to contribute to local improvements in efficiency and quality of work. In the long term, informality may lead to inefficient and undesirable use of innovations. It may also produce increased intransparency, creating a need for further informal innovation. We discuss the generalizability of these findings and implications for research and managerial practice.