MOEF: The Organizational Transformation of a Small Employee-driven Innovation Company

Abstract

The study examines how employee-driven innovation (EDI) in small companies has an impact on the growth in the company and how organizational structures can be used to preserve a high degree of EDI. This will be examined through the following research question: How can small companies transform their organizational structure in periods of growth in order to preserve a high degree of EDI? On the basis of the research question our study has three goals: First, it aims to understand how EDI in companies leads to growth. Second, it aims to consider how growth could lead to more formal organizational structures. Lastly, it aims to analyze how formal organizational structures can be implemented advantageously to preserve EDI. Research indicates a gap in the literature between how EDI and growth is understood in relation to structural formality. We examine the gap between two diverging theories; Høyrup et al. (2012), who suggest that large companies with a high degree of EDI benefit from informal structures, and Antonio et al. (2010), who suggest that growth in entrepreneurial companies is best sustainable with implementation of formal structures. In bridging the two literature gaps we investigate the relationship between formal and informal structures in small entrepreneurial companies that experience growth. In order to understand how EDI can be supported in growing companies, we propose a model that illustrates how practice-based learning best facilitate an organizational structure that supports both innovative and adaptive learning. We conducted an in-depth case study of the small company called MOEF to illustrate how a small growing EDI company approaches the challenges of growth. And also how the employees, partners and managers of MOEF perceived the organizational transformation that they were going through. The findings from the research suggest that the effect of growth in an EDI company contributes to a shift in the use of adaptive and innovative capabilities in the company. We saw that the EDI company was able to dynamically reconfigure their resources and work within the new organization that supported both informal and formal structures. The findings support our model, that practice-based learning creates dynamic capabilities, which are important for an EDI company to utilize its resources best. We conclude that a balance between the company’s innovative and adaptive capabilities are vital for the company's ability to grow while still being innovative.