Economic Determinants of Organizational Innovation

A study was made of how the economic orientation of an organization can influence its innovativeness. The effects of two factors, organizational slack and economic orientation, were studied in an empirical setting. Measures of these two variables were made in a group of hospitals and correlated with the frequency and promptness with which new drugs were tried in the hospitals. Trial of new drugs tended to vary directly with organizational slack and inversely with economic orientation. This is a special case, however, since the primary goal of hospitals is not economic, and the costs of trying of new drugs are minimal. It is suggested that the factors studied may be more important in more typical situations. Martin M. Rosner is associate professor in the College of Commerce at De Paul University.