The Nature of Constraints: some prior explorations
The role of constraints in innovation has been acknowledged for long in maxims such as“necessity is the mother of innovation,” but research remains surprisingly rare. Constraintsare usually lumped together with other exogenous events that alter the environment wherefirms operate. Explicit research on constraints has divided to two streams of research. The“resource slack” research, focusing mostly on financial constraints, tends to either seeconstraints as negative, limiting factors that bound individual and organizationalperformance and limit exploration (e.g. Amabile, 1996; Ancona, 1990; Camison-Zornoza etal. 2004; Damanpour, 1991; Gassman and von Zedtwitz, 2003; Nohria and Gulati, 1996). Thisresearch stream makes an argument that innovators’ access to financial resources – resourceslack - is a key determinant of its performance.The “breaking the barriers” research stream, on the other hand, sees constraints as “focusingdevices” (Bradshaw, 1992; Frenken, 2006) that help individuals and organizations focus theirattention and cognitive resources to overcome technological “bottlenecks” (Rosenberg, 1976)or “reverse salients” (Hughes, 1983) that hold up technological progress. According to thisview, constraints force otherwise complacent firms to rethink traditional practices and adoptnew ways of working (Arthur, 2009; Gibbert and Scranton, 2009; Gibbert and Välikangas,2004; Hoegl et al., 2008, 2010; Katila and Shane, 2005; Mone et al., 1998; Nonaka and Kenney,1991; Srinivas and Sutz, 2005; Välikangas and Gibbert, 2005; Weiss et al., 2011). In support ofthis view, research on environmental innovation has noted that regulatory constraints arethe key drivers of innovation in many industries (Popp, 2006; Popp et al., 2011).However, the research findings are far from conclusive: for example, empirical evidencesuggests that abundant financial resources can also lead to unhealthy complacency andfavor incremental adaptation and exploitation instead of exploration (Mishina et al., 2004;Tan and Peng, 2003). Similarly, the beneficial effect is tempered by e.g. increasedcomplexities introduced by additional design requirements (Arthur, 2009).The diverging views have caused commentators to explain that innovations can happen
constraints (Gibbert and Scranton, 2009; see also Weiss et al., 2011 andHoegl et al., 2010). A careful reading of literature suggests that these two, superficiallyincompatible views can be reconciled. Constraints come in different forms, and whileexogenous non-financial constraints may very well cause eras of ferment that spurinnovation, financial constraints may make exploitation of these explorations difficult. Muchof the rest of this paper will explore the assumption, focusing on the non-financialconstraints and competitive dynamics.
Historical case study: resource constraints and the development ofautogenous copper smelting
In the first half of the 1900s, copper smelters used energy from coal, oil, gas or electricity tosmelt the ore. To improve the efficiency of the process, experiments in utilizing the latentenergy of sulfurous metal ores had been carried out since the 1870s, with first patents beingawarded in 1897 (Inco, 1955). In theory, by burning sulfur one might dispense with externalenergy altogether. Some pilot plants with simple sulfur-burning or “autogenous” furnaceswere in fact built in the early 1900s (Newton and Wilson, 1942; Särkikoski, 1999; Inco, 1955)but the technology’s limitations, uncertainties over recouping high fixed costs inherent inindustrial-scale trials, and a general lack of concern for energy efficiency prevented thetechnology from taking root in the industry. Largely for these reasons, technologicalprogress within copper smelters was limited to minor improvements on existing furnaces.