Many product innovation studies have described key determinants that should lead to successful incremental product innovation. Despite numerous studies suggesting how incremental product innovation should be successfully undertaken, many firms still struggle with this type of innovation. In this paper, we use an institutional perspective to investigate why established firms in the financial services industry struggle with their complex incremental product innovation efforts. We argue that although the impact of micro institutional forces is often overlooked in innovation studies, these forces matter for innovation success. Our study complements the existing innovation literature and provides an additional explanation why incremental product innovation is highly complex and suffers from several liabilities in established firms. Using qualitative data from the Dutch financial services sector collected over the period 1997—2002, the paper illustrates how micro institutional forces at the business unit level affect complex incremental product innovation and how the interaction of these forces delivers their impact.

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Keywords complex incremental product innovation, financial services sector, micro institutional forces, neo-institutional theory
JEL Firm Behavior (jel D21), Firm Objectives, Organization, and Behavior: General (jel L20), Business Administration and Business Economics; Marketing; Accounting (jel M)
Persistent URL,
Vermeulen, P.A.M, van den Bosch, F.A.J, & Volberda, H.W. (2007). Complex Incremental Product Innovation in Established Service Firms: A Micro Institutional Perspective. Organization Studies, 28(10), 1523–1546. doi:10.1177/0170840607068082