High-Stakes Innovation: When Collaboration Undermines (and Sometimes Enhances) Innovation

Organizations must constantly innovate, or else they may suffer consequences that range in severity. In low-stakes situations, they may lose a small opportunity for growth; and in high-stakes situations, they may lose significant market share that threatens their survival. Collaboration is becoming increasingly common for innovation in organizational settings, but higher-stakes conditions create a variety of pressures that undermine collaborators’ ability to innovate. In this study, we investigate why some collaborations are more innovative than others when the stakes are higher, and our results have important theoretical implications. In particular, we found that when the stakes are low, unfamiliar partners had a positive effect on innovation and were more innovative than highly familiar partners; but when the stakes were high, we found that highly familiar partners had a positive effect on innovation and were more innovative than unfamiliar partners. While prior research has shown that highly familiar partners typically undermine innovation through less divergent thinking during idea generation, we found that they enhanced innovation through greater risk-taking during idea selection. As a result, our findings suggest there is an underlying tension between factors that promote divergence during idea generation and factors that promote convergence during idea selection – both of which are necessary for high-stakes innovation.