| Building innovative companies is the key to sustainable economic growth and corporate survival. Much has been written about the characteristics of innovative companies. Although many cases have been studied to explore the process of building innovation capabilities, few cross-case, longitudinal analyses have ever been reported. Moreover, there is almost no research on building innovative organizations from entities that were implementation-minded, and not innovation-oriented. In addition, existing theories of managing innovation are mainly based on manufacturing industries, while overlooking service industries, which have already significantly outgrown their counterparts.;This research is motivated by a problem caused by a new worldwide trend of deregulating service industries: how do the once protected and implementation-minded companies compete with new entrepreneurial entrants? Specifically, we address the question: how is organizational innovation associated with organizational strategy, organizational change, and organizational structure, given the same history and similar environments and resources? We investigate the case of the Baby Bells by integrating the theories of innovation, change, and learning. The seven Baby Bells, which were set up in 1984 after the divestiture of AT&T, shared the same company history and have similar resources and market/regulatory environments. The case of the Baby Bells provides a natural experiment for studying the process of building innovation capabilities. Our data are collected from 10K statements, the F&S Index, annual reports, the CD ROM of US patent information, and the Statistics of Communications Common Carriers. The data are analyzed by the Spearman correlation analysis, multiple regression analysis, and canonical correlation analysis.;We find that, with other factors constant, (1) joint development, emphasizing product differentiation, and technical change are positively related to patent acquisition, (2) interfirm linkages (interfirm interactions excluding joint development) are negatively related to patent acquisition, (3) joint development, emphasizing core competence, and administrative change are positively related to new services introduction, and (4) emphasizing core competence is positively related to promoting non-regulated revenues. |
