The generation process of internal-driven management innovation in companies in transitional economies

Purpose The purpose of this paper is to analyze how internal-driven management innovation (IDMI) takes shape, which highlights the objective-oriented and problem-oriented property of the innovation. Design/methodology/approach Based on a case study of a new practice called 11X integration strategy in Guangzhou Pharmaceutical Holdings Limited, a Chinese pharmaceutical group in Guangdong province, through applying Grounded Theory the authors get a concise systematic framework of generation process that is more practical and more understandable than the counterparts in current literature. Findings First, this paper uncovers five stages and two parallel sub processes in the generation process of IDMI. The sub processes involves practical exploration process (i.e. primary activities) carried out by the internal change agents and theoretical support process (i.e. support activities) carried out by the external change agents. Second, by adopting a process perspective the authors are able to demonstrate how the different activities in both types of processes are combined over time in an intertwined way. Research limitations/implications First, the case the authors studied is embedded in the context of China’s transitional economy, and the single case study limits us to make comparisons of the generation process of management innovation between different market economies. Second, the external-driven management innovation is still a field untouched. Third, in the research the authors explore the issues of how new management innovation is generated and implemented, but the authors do not systematically research on why different companies exhibit different levels of management innovativeness. Practical implications First, the findings suggest that firms should consciously and systematically invest in IDMI to create sustainable competitive advantage. Second, the process framework provides a clear guidance to the managers in Chinese state-owned enterprises who are engaged in developing or adopting management innovation. Third, the study indicates the managers in Chinese company should be aware of the importance of external change agents to IDMI. Fourth, this study could facilitate the enterprises to develop or adopt management innovation based on their real needs rather than just “jumping on the bandwagon” when adopting certain new management skills. Originality/value This study offers a new generation framework by identifying possible facilitators of IDMI that does not yet exist in extant literatures, and the two sub processes – the practical exploration process and the theoretical support process – deepen the understanding of the generation mechanisms of IDMI. Furthermore, the study contributes to reaching a better understanding of management innovation in the context of transitional economy such as China.