Innovation Adoption and Organizational Identity: Identity Dynamism as a Strategic Resource for Top Management Team Decision Making

Organizations continuously face decisions about whether to adopt radical innovations. We examine the relationship between innovation adoption and identity, linking identity with firm strategy to explain innovation adoption over time. We conceptualize identity as comprised of two related dimensions—"who we are" and "what we do"—that provide symbolic meaning and a strategic orientation, respectively. Our core argument is that the degree of coupling between these constituent elements of identity affects managerial perceptions of the relevance of an innovation to the firm, and in turn, their decision to adopt and successfully sustain radical innovations. The ability of senior executives to frame, manage, and adapt these two components enables the adoption of radical innovations. We advance a new theoretical construct, identity dynamism, which describes how processes of coupling and loosening "who we are" from "what we do" either enables or inhibits innovation adoption. We illustrate a range of conditions when organizational identity is an important dynamic capability. These ideas lead to a range of senior team implications that shape their firm's ability to adopt and/or shape product class evolution.