strategy from 2007-2017 and map to what degree and
how innovation and strategy have been treated together
in prior research. We identify themes covered in this
research and reveal that the papers that link these
research areas are extensively cited. Still, a lot of work
remains to be done, and fusing core properties of
strategy theory with recent ideas from innovation
literature we believe is both obtainable and prudent at
the present time.
The structure of this paper can be described as follows.
First, we present extant strategy and innovation
management theory to highlight similarities and
differences across these two bodies of research and pose
our research question. Second, we explain the method
applied in the search, review, and analysis of the
reviewed papers. Third, we present the findings from our
analysis of the extant body of literature addressing
strategy and innovation. And, finally, we offer a
concluding discussion with implications on future
developments for research and practice.
‘)0
Going back to Schumpeter and the notion of ‘creative
destruction’ (Schumpeter, 1949), the need for innovation
&+)’,+!’&
The essential role of innovation and entrepreneurship
in the sustainability of a firm’s competitiveness was
pointed out by Schumpeter (1949). However, it
remains conceptually unclear how extant strategy
frameworks explicitly integrate and build on a
Schumpeterian paradigm. Despite efforts to develop
an improved understanding of how strategy and
innovation theory can be integrated (e.g. Ramanujam
& Mensch, 1985; Pisano, 2015; Teece et al. 2016),
strategy theory has only to a limited degree become
fused with ideas from innovation theory. In a
contemporary business environment where the
biggest and most valuable technology firms (FAANG:
Facebook, Apple, Amazon, Netflix, and Google) are
distinguished by their innovation capacity and
capability, it is problematic that innovation activities
predominantly remain outside the strategy theory
domain.
To fill this void, we offer the results from a structured
literature search in the Web of Science and EBSCO
databases that attempt to integrate strategy and
innovation research. In particular we review the
highest ranked journals in the area of innovation and
Understanding the Strategy-Innovation Link
in an Era of Disruptions
Karl Joachim Breunig & Tale Skjølsvik
Whereas innovation and strategy traditionally are treated as two separate fields of expertise and
research, this conceptual paper aims to identify how strategy theory can be linked to recent
developments within the innovation field. Innovation research seeks to explain the process of creating
new products and services. Strategy research, in turn, intends to explain how businesses create lasting
competitive advantages. In recent years, research in strategy has shifted towards explaining how
organizational capabilities and environmental turbulence are related, increasingly recognizing that it
is difficult to retain sustainable competitive advantages, unless market dynamics and business renewal
are addressed. To establish a systematic integration and analysis, we present the results of an extensive
literature review of 1,268 research articles published between 2007-2017 to address the question: To
what degree, and how, have strategy and innovation been linked in leading management journals? Our
analysis reveals that research addressing both strategy and innovation is limited, but highly cited.
Moreover, we identify 5 main themes, which in turn reflected 12 subsidiary themes addressed in extant
research. These themes combine to give important insights about the research that been done and
what is likely to be needed going forward.
The best way to predict the future is to create it.
Peter Druck
and entrepreneurship is recognized in most firms as a
way to guarantee their sustained competitiveness.
However, innovation and strategy have traditionally
been treated as two separate fields of expertise and
research. Innovation research seeks to explain the
process of creating new products and services (Burns &
Stalkers, 1961). Innovation is largely regarded as a
social process consisting of three core activities
(Newell et al., 2009). The first activity is the generation
of new solutions, also referred to as ‘invention’. Then
the act of diffusion follows, which denotes the process
of spreading the new solution to other individuals so
that they also get an understanding of it. Finally, the
innovation process depends on implementation, that
is, other individuals and communities also start using
the new solution.
Innovation strategy refers to articulating the role of
innovation in achieving organizational aims (Cooper,
2001), by aligning the overall business strategy with
innovation decisions (Menor & Roth, 2007). Recent
innovation management research has documented
how firms utilize their resources and capabilities for
the development of innovations, such as new
products, services, or processes (Hill et al., 2015), and
explicitly link resources and processes to innovation
success (Froehle & Roth, 2007; Aas et al., 2015).
Furthermore, research has shown a positive
relationship between the implementation of
innovation activities and future business performance
(Bowen et al., 2010; Rubera & Kirca, 2012). Indeed,
several authors (Easingwood, 1990; Johne & Storey,
1998) stress that it is important to set clear goals for the
innovation program as a whole. Empirical studies
similarly suggest that leading firms are likely to have an
explicit innovation strategy (Cooper et al., 2002). In
recent years, the focus of research on innovation
management has primarily been concerned with
innovations related to physical products (Droege et al.,
2009), while limited work has also been done to
systematically review and categorize the different
attempts to create a more explicit strategy-innovation
link.
In contrast, strategy research aims to explain how
businesses create lasting competitive advantages
(Porter, 1985). The field of strategic management is
nevertheless fragmented and overlaps with a number
of theoretical fields, such as economics, sociology,
marketing, finance, and psychology (Nag et al., 2007).
In the late 1970s, the field was in its infancy and relabelled from ‘business policy’ (Schendel & Hofer,
1979). Due to the diversity of the field, a coherent
established definition of strategic management has been
lacking (Mintzberg et al., 1998). Based on a major survey
of other scholars’ research, Nag et al. (2007) defined
‘strategic management’ as “intended and emergent
initiatives, taken by managers or on behalf of the
owners, involving utilization of resources, to enhance
the performance of firms in their external environmentâ€.
Strategic management research was in its early days
largely rooted in what is referred to as the StructureConduct-Performance tradition. It is most notably
captured in Porter’s influential contributions (Porter,
1980, 1985), in which competitive advantage is assumed
to be based on industry or strategic group, a group of
companies within the same industry that have a similar
strategic profile, and are only to a limited degree linked
to innovation. In parallel, Mintzberg and colleagues
(Mintzberg, 1978; Mintzberg & Waters, 1985; Mintzberg
& McHugh, 1985) argued for an alternative view on
strategic management, proposing that not all formal
strategies are implemented as intended, and that many
implemented strategies emerge from outside of the
scope of ex ante analyses and plans. Innovation was thus
not a key orientation of these earlier theories on strategy.
More recently, research in strategy has shifted towards
explaining how organizational capabilities and
environmental turbulence are related, increasingly
recognizing that it is difficult to retain sustainable
competitive advantages unless market dynamics and
business renewal are considered (Teece et al., 1997).
Given rapid market changes and innovation pressure,
caused for example by digitalization, an explication of
how strategy relates to innovation is needed. To succeed
in a globalized business environment characterized by
hyper-velocity (Francis & Bessant, 2005; Crossan &
Apaydin, 2010), it has been claimed that organizations
need to manage change in increasingly volatile and
complex service eco-systems (Yoo & Kim, 2015). Under
such conditions, dynamic capabilities possessed by
firms have been linked to their sustained
competitiveness (Eisenhardt, 2004), and claimed to be
central to innovation (Tidd, 2012). However, the ability
to replicate dynamic capabilities and innovation success
over time has not been firmly established in extant
research.
In the early 2000s, an entrepreneurial perspective on
strategy gained ground, emphasizing value creation
rather than appropriation (Hitt et al., 2001). The
multiplicity and complexity of strategic management, as
Understanding the Strategy-Innovation Link in an Era of Disruptions
Karl Joachim Breunig & Tale Skjølsvik
well as the need to consider balances and paradoxes,
have also been recognized in recent strategy research.
Some examples include dealing with business
ambidexterity (Tushman & O’Reilly, 1996; Birkinshaw
& Gibson, 2004) by balancing exploration (innovation)
and exploitation (the productivity of existing solutions
and products), and managing paradoxes (Eisenhardt,
2000). Still, strategy theory has to a limited degree been
fused with ideas from innovation theory (Markides,
2006; Lightfoot & Gebauer, 2011; Pisano, 2015; Teece et
al., 2016). The blue ocean strategy (Kim & Mauborgne,
2004), business model innovation (Christensen &
Johnson, 2009; Teece, 2010; Osterwalder & Pigneur,
2010; Zott et al., 2011; Foss and Saebi, 2017), dynamic
capabilities (Kogut & Zander, 1992; Barnett et al., 1994;
Teece et al., 1997; Eisenhardt & Martin, 2000, Helfat &
Peteraf, 2003), and disruption theory (Christensen,
1997; Markides, 2006; Manyika et al., 2013; O’Reilly III
& Tushman, 2016) are notable exceptions.
+ ‘*
The aim of this study is to review research that aims to
bridge strategy and innovation in highly ranked
journals. In doing this, we took an inductive approach,
with both qualitative and quantitative analysis. This
approach enabled us to develop a solid understanding
of the areas where strategy and innovation has been
interlinked. It also enabled us to tease out dominant
themes in this research, as well as potential avenues for
future research.
3.1 Data collection and compilation
In doing a systematic literature review, one typically
goes through three main phases: planning, which
involves the identification of the research question and
defining boundaries; conducting, which involves
searching for and analysis of relevant literature; and
reporting, that is, formalizing the findings and
developing implications (Tranfield et al., 2003; Ashby et
al., 2012). The first two phases will be described here,
while the third phase is described in the Findings
section.
In the planning phase, we first formulated our research
question. We then defined the boundaries of our study
to include academic articles published during the
period 2007-2017 in the eight top strategy and
innovation journals globally, as listed by 2015
Association of Business Schools academic journal
guide (ABS list) (Harvey, 2012). The ABS-list has
separate categories for both innovation and strategy
with four top journals at level 4 in each field. These
journals are for strategy: Strategic Management Journal,
Global Strategy Journal, Long Range Planning, and
Strategic Organization; and for innovation: Journal of
Product Innovation Management, Research Policy, R&D
Management, and Technovation.
The ABS list is the most comprehensive and frequently
used ranking list among business research scholars
around the world when choosing publication outlets. It
is the dominant source used to evaluate business
research across Europe and the US. Thus, limiting the
scope of journals to the ABS list suggests that the
research included in the literature review is likely to be
of high quality and reliability.
After having identified the research question and the
scope of the study, we continued to the conducting
phase. In this phase it was important to develop a
database of articles that integrates innovation and
strategy. In doing so, we used The Web of Science Social
Sciences Citation Index (SSCI). Due to different search
categories and search methods, we had to use different
search terms across databases. We used the search terms
innovati* strateg*, where the asteric means all words that
include this start, thus allowing ‘strategic’ and ‘strategy’
as well as ‘innovative’ and ‘innovation’ to be part of the
search. Our investigation covered a search term in Web
of Science referred to as Topic, which includes abstract,
author keywords, and Keywords Plus, the latter which
are index terms created by database managers based on
frequently occurring words in the titles of references
cited in an article. Thus, our search basically covered all
relevant available information in Web of Science, as full
text searches are not possible.
The search resulted in a total of 1,268 hits. To limit the
scope of the qualitative analysis and to ensure relevance
of the included papers, only papers with both strategy
and innovation in the abstract among these papers were
compiled into a separate dataset of 381 papers. This was
done by using the EBSCO database, which allows for
specific searches in the abstract, a function not available
in Web of Science.
3.2 Data analysis
The data analysis included both quantitative and
qualitative components. In particular, the analysis was
conducted in two main phases: 1) familiarization and
description of the data based on quantitative methods,
and 2) identification and analysis of key research themes
based on qualitative methods and descriptive
Understanding the Strategy-Innovation Link in an Era of Disruptions
Karl Joachim Breunig & Tale Skjølsvi
quantitative analysis of the identified themes. In the
familiarization phase, we developed an overview of the
research that include both innovation and strategy. In
particular, the following variables was mapped: 1)
number of papers over time, 2) emphasis across
journals, and 3) citations. These could be directly
mapped form the results of the search. In addition, we
did qualitative analysis in order to classify the different
papers. This was done based on a classification of the
content of the abstract. In particular, each abstract was
first classified inductively and based on a research
centric orientation, following Gioia et al. (2013). In
turn, these classifications were further compared to
research-based themes and classified at a more
aggregate level for comparison. To the degree that the
abstract mentioned theory and methodology used in
the paper, it was included in the classification of the
paper and added to the database.
!&!&*
The findings will be presented in the two parts: (1) A
descriptive overview of number of papers, journals and
citations over time, and (2) The main themes covered in
the research, including count.
4.1 Descriptive overview of papers
The number of papers in this area has been relatively
stable over time, with some fluctuation over the last 4
years. The general trend is a slight increase, but no
significant trend. Among other reasons, this is partly
caused by the limited number of journals that cover this
area, in which only so many papers are published every
year. Please see figure 1 for a general overview of the
data over time. In the figure, the Web of Science search
as explained above covers the 1,268 papers, while the
EBSCO search only incorporates the 381 papers with
both innovation and strategy in the abstract. The trend
of greater elaboration and a database with both
innovation and strategy in the abstract is very similar.
In terms of the types of journals covered in the search,
the top journals within the innovation discipline seemed
to consider strategy to be an important area of research.
!,) Overview of identified publications per selected journal
!,) Overview of number of selected publications over time
Understanding the Strategy-Innovation Link in an Era of Disruptions
Karl Joachim Breunig & Tale Skjøls
In contrast, primarily only two of the top strategy
journals have papers that link strategy and innovation,
while interest within the field of strategy is much more
limited. Figure 2 provides an overview of the identified
publications outlets.
!,) Overview of selected journals measured in citations (March 2018)
When one looks at the impact of research that has been
done that deals with both innovation and strategy, the
average citation rate in all the journals is very high.
Thus, scholars in other fields have shown interest in
the work that is being done in this area.
Figure 3 shows that the average number of citations
per paper is extremely high for papers that cover both
areas. As the selection of papers gets more narrow – as
in the case where only papers with the concepts of
innovation and strategy in the abstract is included – the
number of citations in 6 out of 8 journals increase.
Further, the number of citations in the strategy
journals is considerably higher than in the innovation
journals.
4.2 The main themes covered in the research
Through a tedious classification process explained
under that data analysis section above, the 381 papers
were inductively reduced into 5 main themes, which in
turn reflected 12 subsidiary themes. Of these 5 themes, 3
of them was primarily oriented towards innovation and
marketing with a more limited relevance to strategy.
These were: conditions of ecosystem, business
relationships and policies, fundamentals in terms of
governance and technology, and value creation in terms
of design, product, and customer. Additionally, two
areas were identified that illustrated the bridge between
strategy and innovation as opposed to emphasizing
primarily one over the other: value appropriation in
terms of the choice of an open versus protected
!,) Overview of identified themes
Understanding the Strategy-Innovation Link in an Era of Disruptions
Karl Joachim Breunig & Tale Skjølsv
approach to innovation, and the strategy-innovation
link, which includes business models, innovation
strategy, and disruption.
4.3 The strategy-innovation link
The research where strategy and innovation are linked
concerns 3 main areas: business models, disruption
and innovation strategy. Business models had the
highest total number of citations, with an average of 79
citations per publication. Of the 18 publications, a
conceptual paper by Teece (2010) was cited 1,047 times
and largely drives this number, as a seminal paper on
business models. For the rest of the papers, the average
number of citations was 21. Many of these papers are
relatively recent and all the papers were published
between 2010-2017. In particular, various papers deal
with the concept of a business model (Baden-Fuller &
Morgan, 2010; Teece, 2010; DaSilva & Trkman, 2014)
and different ways of making innovations in the
business model, for example, based on pricing and
payment models as well as resources (Corrocher and
Zirulia, 2010; Denicolai et al., 2014; Winterhalter et al.,
2017). Some of the later contributions, (Spieth et al.,
2014; Cortimiglia et al., 2016) identify the interlinkage
between business models and strategy-making.
In addition to business models, innovation strategy is
mentioned as a key area. This area emphasizes several
different strategic decisions that companies need to
make in their innovation efforts. In particular, it
concerns short and long term decisions in R&D (Artés,
2009; Flammer & Bansal, 2017), the decision to exploit
versus explore knowledge ( Hernández-Espallardo et
al., 2011; Bauer & Leker, 2013; Piao & Zajac, 2016; Enkel
et al., 2017), internal versus external R&D resources
(Hagedoorn & Wang, 2012), and whether to offshore
R&D activities (Nieto & RodrÃguez, 2011; RodrÃguez &
Nieto, 2012; Steinberg et al., 2017).
Finally, disruption deals with how existing industries
face disruptive business models or technology
innovations. A lot of what has been written with
regards to strategy and innovation in this area deals
with incumbent reactions (Awate et al., 2012; Huesig et
al., 2014) and the role of the government (Ruan et al.,
2014).
4.4Value appropriation
In addition to the direct link between strategy and
innovation in existing research, the literature points to
value appropriation as an essential area of research
where these fields are integrated. In particular it deals
with the strategic difference it makes in an organization
when it comes to choosing openness or protectionism,
which seems rooted in the dichotomy of a relational
versus a transactional orientation in organization. Two
main areas have gained interest: patents and intellectual
properly strategy (IPS) versus open innovation. These
areas stand in strong contrast in most cases and
represent an important strategic choice in the area of
innovation strategy.
With regards to open innovation, a number of areas have
been studied, such as motivations (Appleyard &
Chesbrough, 2017) and trade-offs between openness
and protection (Raasch et al., 2009; Knudsen &
Mortensen, 2011). In the area of IP protection, several
papers have dealt with how organizations make
protection decisions (Gallié & Legros, 2012), the use of
licensing (Gallié & Legros, 2012; Großmann et al., 2016),
standard catch-up collection and use of patents
(Schmidt, 2013; Jell et al., 2017).
!*,**!’&
Most contemporary organizations face challenges
related to achieving sustainability and advantages in
periods of market change. This is particularly salient in
times of digital disruption and in the face of the so-called
‘4th industrial revolution’. These changes demand
innovation to be integrated as a central part of a
company’s organizational strategy. In addressing the
societal level, a key emphasis is now placed on
‘ecosystems’ and ‘value networks’, with extensive
research focusing on the innovation context beyond
organizations, such as within cross-organizational
collaboration or caused as a response to particular
policies and regulation. At this level, the main focus is on
innovation theory, which has identified a few links to
strategy theory.
At the organizational level, business strategy is
increasingly being merged with the core properties of
innovation theory, which are to obtain scalability and
differentiation into “blue ocean strategiesâ€. Likewise,
visionary and transformative leadership styles are
merging with ideas from entrepreneurship research to
address creativity and values. At the value creation and
appropriation level, the core issue relates to protection
of innovation advantages, where open source innovation
and a proprietary approach stand in strong contrast to
each other. This value creation and appropriation
Understanding the Strategy-Innovation Link in an Era of Disruptions
Karl Joachim Breunig & Tale Skjølsvi
tradition is also largely rooted in innovation theory
tradition. These different levels are illustrated in Figure
5.
The core of the strategy-innovation link incorporates a
combination of theories that directly look at business
models, disruption, and innovation. Future research
should use these different levels to further develop an
understanding of how innovation can be transformed
into and integrated with strategy.
‘&$,*!’&
In this study we have conducted a structured literature
review to assess to what degree strategy and innovation
have been linked in research conducted in leading
management journals. The analysis shows that links
between the two main concepts have been made at three
different levels of analysis: 1) at the societal level, 2) the
organizational level, and finally 3) at the value creation
and appropriation level. Additionally, the review shows a
theoretical link between the concepts business model,
disruption, and strategy innovation.
By discussing how innovation and market characteristics
affect business strategy, the paper contributes to
knowledge on the strategy-innovation link. The
conclusions reported here may provide considerable
assistance to managers who are searching for better
ways to develop strategy and manage their
organizations, while increasing their innovative abilities
and capacities. By pointing to different theoretical
positions, managers can get a sense of which theoretical
perspectives to consider in their efforts to develop their
organizations into the future. While strategy in many
organizations has up until now used analyses in the form
of five forces, the Boston Consulting Group’s (BCG)
matrix, the resource based view of the firm, and other
approaches, we believe that managers in the future
should think freshly in terms of the types of theories they
build their strategy work on, if one of their key objectives
is value creation and innovation, as opposed to value
appropriation. The paper suggests that as innovation to
a larger degree becomes a key objective in many
saturated organizations under conditions of change,
business model theory, disruption theory, and
innovation strategy should take place as core theoretical
perspectives for organizations in their strategy
processes.
Nevertheless, the conceptual nature of the study has
limitations and further empirical research is needed to
explore and test if the conclusions of the discussion are
to reach beyond the provided categories.
!,) Levels and details of the strategy-innovation link
Understanding the Strategy-Innovation Link in an Era of Disruptions
Karl Joachim Breunig & Tale Skjølsv
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Understanding the Strategy-Innovation Link in an Era of Disruptions
Karl Joachim Breunig & Tale Skjølsvik
‘,+ + ,+ ‘)*
Karl Joachim Breunig is a Full Professor of Strategic
Management at the Oslo Business School, Oslo
Metropolitan University – OsloMet, where he is
heading the research group on Digital Innovation
and Strategic Competence in Organizations
(DISCO). He received his Ph.D. from BI Norwegian
Business School, and holds a MSc from London
School of Economics. Prof. Breunig’s research
concentrates on the interception of strategy and
innovation theory, and involves topics such as
service- and business model innovation as well as
digitalization in knowledge intensive firms.
Tale Skjølsvik is a Full Professor of Technology
Management, and the Vice-Dean of Research at the
Faculty of Technology, Art & Design at OsloMet.
She holds a Ph.D. in Strategic Management from BI
Norwegian Business School and has experience as
a management consultant from Bain & Company
and Gemini Consulting. Tale develops and runs
executive education within strategic management
and digital transformation, consults organizations
and does ostensive public speaking. Her research
interests concentrate on the strategic management,
innovation, digitalization and procurement of
knowledge intensive services and firms.
Citation: Breunig, K., and Skjølsvik, T. 2020. Understanding the
Strategy-Innovation Link in an Era of Disruptions. Technology
Innovation Management Review, 10(8): 4-13.
http://doi.org/10.22215/timreview/1377
Keywords: Conceptual research, disruption, organizational
capabilities, structured literature review, strategy-innovation link.
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and Revolutionary Change. California Management
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Gassmann, O. 2017. Business Models for Frugal
Innovation in Emerging Markets: The Case of the
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Powerhouse. Harvard Business Review, 93: 72-12.
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Recent Developments and Future Research. Journal
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Understanding the Strategy-Innovation Link in an Era of Disruptions
Karl Joachim Breunig & Tale Skjølsvik
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