Recent attention to management innovations in both scholarship and managerial discourse offers a promising way of reinvigorating firms that have faced financial and competitive setbacks. Research has addressed several important aspects of management innovation as a source of firm survival and competitiveness. However, conceptual frameworks and empirical evidence remain scarce as to how management innovations come about, particularly those in the periphery of organisations and that are carried out without management’s consent or approval.
In this light, this project is aimed to examine the activities, practices and organisational conditions that give rise to the emergence, diffusion and stabilisation of peripheral unsanctioned management innovations. In particular, the objective of the present project is to resolve the following questions:

a) What practices are enacted by organisational members at various levels and functions that bring about unsanctioned management innovations?
b) How are these practices distinguished in various cultural and political organisational environments?
c) How do innovators select, use, appropriate, and modify tools and techniques in unsanctioned management innovation practices?
d) How do social and affective mechanisms enable or disable the performance of unsanctioned management innovation activities?

Kort om genomförandet.
Discovering, let alone following the process of unsanctioned management innovation, is a grand challenge. Most unsanctioned projects are underground, illicit activities carried out by single individuals or small groups who act in secrecy to protect their innovations from early judgment and abruption by management or peers competing for scarce resources. In a series of studies, these challenges were addressed using a multimethodological approach.

In an initial study of a multinational manufacturing firm, unsanctioned innovation was approached using a combination of observations and interviews across the organisation's ranks. The primary purpose of this research design was to understand unsanctioned innovation practice within firm boundaries. The research design provided a unique opportunity to gradually create trust and confidence among informants to speak openly about unsanctioned or underground work. When participants gained confidence in the researcher’s intentions and relationship with top management, the quality and amount of information exchanged increased. This approach contributed to fine-grained, detailed accounts of the unsanctioned innovation process both in-situ and retrospectively. The creation of mutual trust and confidence also rendered full access to the firm’s digital repositories of policy documents, project briefs and evaluations. The data generated from this study helped map and understand the process through which 17 unsanctioned practice innovations came about.

In a second study, a participant observation methodology was used in a series of open strategy workshops to study the development of multidextrous business model innovation. The study was carried out in an entrepreneurial high-growth multinational firm operating in the healthcare industry. The workshops provided access to the in-situ innovation of new business models and retrospective accounts of the practices underpinning business model innovation for operating in highly regulated markets. The purpose of these studies was to uncover unsanctioned innovation outside firm boundaries. The open strategy workshops were highly effective research contexts to serve this purpose as the setting itself was conditioned upon the principles of reciprocity, trust, no competition and no business transactions among participating firms. This approach contributed to an in-depth understanding of how unsanctioned innovation outside firm boundaries helps overcome the constraints of resources being tightly coupled with the firm’s global network, and the original business model is highly coherent across multiple national boundaries.

In a third study, a survey-based approach was used to understand the extent to which secrecy (as a proxy for unsanctioned work) enabled or constrained management in Swedish and Finnish manufacturing firms in their pursuit of shaping innovative digital strategies. The purpose of the survey was to uncover potentially systematic tendencies of working in secrecy across manufacturing firms (similar to study one mentioned above). This study developed a unique secrecy measure that other scholars can use and helped find systematic evidence of the constructive effects of secrecy for digital transformation.

In all three studies, the methodologies employed have served to uncover various degrees of complexity, spread and activity relating to unsanctioned management innovations, which will be elaborated further below.


Projektets tre viktigaste resultat och bidrag till den internationella forskningsfronten, samt ett resonemang kring detta.

Study one (Demir & Knights, 2021) was designed on the premise that the process of practice innovation is scarcely understood and poorly developed. The practice and process literature on unsanctioned practice innovations highlights the primacy of habitual, repetitive actions (Miettinen, Paavola, & Pohjola, 2012) that inhibit individual agency (Emirbayer & Mische, 1998). For example, the question concerning agency, therefore, remains implicit or considered a straitjacket to action. Given the social complexities and agency-driven yet secretive aspects of such practice innovations, unsanctioned practice innovations are not the most accessible phenomena to research, but they deserve more detailed attention. Prior studies show that unsanctioned innovations can constrain innovators from meeting their objectives (Oliver & Cole, 2019) or be fairly assessed by other than already institutionalised performance regimes (Adner & Levinthal, 2008). Hence, this literature remains limited in its analysis of the processes through which unsanctioned practice innovations emerge and develop. By contrast, our study has taken some initial steps to advance knowledge of practice-process research focussing on bottom-up practice innovations (Friesl & Larty, 2018; Yakhlef & Essén, 2013).

Specifically, our study advances theory by empirically inducing a model for unsanctioned practice innovations, comprising three recursively interacting processes of (1) delegitimising contested practice, (2) developing procedural legitimacy and (3) establishing pragmatic legitimacy for unsanctioned innovations. While the literature tends to overlook the critical step of delegitimising existing practice paradigms, a practice theoretical approach allowed us to reveal how delegitimising current practice would seem like a breakdown in practice (Sandberg & Tsoukas, 2011), disrupting organisational members’ cognitive orientation towards the present task (Kudesia, 2019) and only then prompting them to restore or improving practice (Yakhlef & Essén, 2013). In introducing an agency perspective, we advance the understanding of the sources of intentional disruption of contested practice in pursuit of practice transformation, which is a central objective of delegitimising contested practice. Specifically, we discuss how delegitimising old practice requires some degree of embodied familiarity with the contested domain and the development of political power to operate at the fringes of the contested practice domain.

We further reveal that delegitimising existing practices and performance regimes is a crucial manoeuvre for gaining procedural legitimacy, as new practices built on “good faith effort” tend to gain procedural legitimacy despite clear outcome measures (Suchman, 1995: 580). Notably, we show how deviance from the norm can help create ‘productive voids’ for practice innovation without being sanctioned or even noticed by organisational members and leaders. In effect, productive voids allow deviants to disclose secret elements of new practices, which conditions the flow of procedural legitimacy and the likelihood of essential feedback that increases the likelihood of adoption by peers. However, in contrast to prior studies of practice adoption (Canato, Ravasi, & Phillips, 2013) and adaptation (Ansari, Fiss, & Zajac, 2010), our findings suggest that procedural legitimacy does not necessarily increase fidelity (Ansari et al., 2010) or resemblance of UPIs with prior practice, but is significant for making them fit the practice repertoire of adopters. Nonetheless, we argue that procedural legitimacy is necessary but not sufficient for unsanctioned practice adoption.

As a final step, our findings suggest that practices are shared by a group of people with a common epistemic culture (Knorr Cetina, 1999). Our findings, however, show that unsanctioned practice innovations are only adopted by peers when deviants had managed procedural legitimacy properly and, conversely, when achieving only partial sensemaking among peers and not demonstrating the value-rationale (Suchman, 1995) of unsanctioned practice innovations to peers adoption was low. Hence, when deviants overly focused the innovation process on their personal needs and value-rationale, they provide few clues to “normalise the breach” (Weick, Sutcliffe, & Obstfeld, 2005: 415) and, therefore, failed to reduce the equivocality (Weick et al., 2005) surrounding their new practices. Therefore, such practices remained stigmatised in the prevailing epistemic culture in which the focal deviants were embedded. Indeed, for practice adoption to take place, innovators have to ensure that pragmatic legitimacy is established by making new practices plausible solutions to adopter’s specific problems and issues, their functioning comprehensive to peers’ existing practice repertoire, and the outcomes considered predictive for specific action sequences.

In contrast to study one (Demir & Knights, 2021), study two (Demir & Angwin, 2021) was designed to understand the boundary conditions of unsanctioned practice innovation by focusing on activities beyond organisational boundaries as opposed to innovation activities taking place within organisational boundaries. In this paper, we question the assumption that practice innovations are bound to evolve within the organisation in which they are aimed to operate. More specifically, we propose the idea that practice innovations may evolve outside firm boundaries, among top management, with little support, and even despite the formal consent of the TMT. While this idea is recognised in the open innovation literature (Chesbrough, 2003; Dahlander & Gann, 2010), few have paid particular attention to how management innovations emerge in such open contexts, which are neither sanctioned by top management nor part of the ordinary innovation practice of the organisation.

Specifically, study two seeks to understand some limitations in the literature on business models—an effective management practice that ensures the generation and capture of value through organisational design (Foss & Saebi, 2017: 216). In this paper, we explore how the contextual dynamics of foreign host markets of transforming economies affect business model innovation (BMI). The literature suggests two distinctive ways in which firms may address such challenges. First, in pursuit of global integration of practices, products, processes, etc., firms replicate their existing BMs in host markets but are liable to the different local demands and, therefore, respond to the local conditions of the host market through experimentation and co-optation of practices developed or used elsewhere (Dunford, Palmer, & Benveniste, 2010). Second, the literature suggests that when firms find their existing BMs are threatened in the new context, notably when facing complexity in the institutional regime and turbulence in the market, they engage in trial-and-error and explore alternative BMs (Teece, 2014).

To capture these disparate yet important views into a coherent framework, we offer the concept of multidexterity, which recognises the co-existence of multiple BMs. Specifically, we argue that multidexterity can be a productive concept to explain an organisation’s capability to develop and maintain multiple BMs simultaneously to address institutional and organisational dynamics. Notably, we highlight that a particular form of multidexterity, namely unsanctioned practice innovation pursued through skunkworks, can help organisations develop innovative business models. Skunkworks are practices enacted autonomously by individuals or groups that challenge the structural context of the organisation (Burgelman, 1983) and loosen the selection and validation regimes of the current strategy (Adner & Levinthal, 2008).

Our findings show that when the host country offers unfavourable institutional frameworks for multinational firms’ global BMs, they can favourably arbitrate components of the global BM. However, this is only a viable option when the industrial and technological standards offer an opportunity to act entrepreneurially despite being inconsistent with the firm’s BM. Indeed, under such conditions, managers will engage in skunkworks to arbitrate the firm’s organisational and strategic context (Burgelman, 1983) by developing new performance regimes (Adner & Levinthal, 2008). Our findings show that multinational firms in transforming economies can do so by taking advantage of loosely-coupled resources and weakly coherent practices, such as the use of informal ties (Martin, 2014) and open strategy networks (Hautz, Seidl, & Whittington, 2017) in pursuit of innovating localised BMs. In this way, skunkworks offers a distinctive practice space within multidextrous BMI using several types of resource and practice couplings simultaneously (Orton & Weick, 1990) despite the unique configuration of the global BM.

In a third study (Schildt et al., 2021), we take a closer look at what happens when practice innovation in the form of practices for digital transformation are poorly supported by peers and management, as found in study one (Demir & Knights, 2021). While there is growing interest in ‘digital transformation’ of organisational practices and processes among practitioners and in the management literature (Yoo et al., 2012), little empirical research exists on factors that explain why established firms develop and exploit digital innovation (Bharadwaj et al., 2013; Osiyevskyy & Dewald, 2015), which is particularly true among SMEs that lack dedicated resources for corporate venturing and exploration (Audia & Greve, 2006).

To fill this gap, we set out to study the organisational factors that might explain why some manufacturing firms shift their strategic focus towards digital innovation while others do not. We developed hypotheses to examine top management teams’ strategic focus on digital innovation concerning perceived external pressures from competitors, formal innovation processes, and organisational secrecy, moderated by the past experience top management has in these domains of digitalisation. We examined three forms of digital innovations relevant to manufacturing companies: (1) optimisation of operations, (2) customer relationships, and (3) offerings. We were particularly interested in the role of organisational secrecy as transparency emerged as an important theme in our initial interviews with managers across multiple companies. Specifically, secrecy involved policies about such things as access to databases, but also social norms, practices, and habits that underpinned organisational secrecy (Costas & Grey, 2016).

Our analyses support the importance of perceived external pressures in refocusing top management team attention, particularly for firms with low prior digitalisation levels. Most importantly, organisational secrecy inhibits manufacturing companies’ efforts to explore practices for capturing more complex opportunities from digital customer interfaces and new services. We found that secrecy derives from formal and informal social processes that inhibit managers and front-line employees from accessing information and knowledge across internal boundaries (Costas & Grey, 2014, 2016). Notably, our findings show that the lack of open information sharing confounds an organisation’s ability to conceive and explore new digital opportunities that cut across established units. In contrast to prior studies, our findings show no significant effect of formal structures on innovation. While formal processes help support digital innovations in established focus areas (Terziovski, 2010), they appear to have limited effect on transformative strategic change.


These findings counter some assumptions made in process models of strategy and corporate venturing by highlighting some negative issues about the oft-neglected side effects of secrecy when changing the organisation’s strategic agenda through peripheral or bottom-up innovation. More specifically, our study contributes to the emerging research on digital transformation (Autio et al., 2018; Nambisan, Wright, & Feldman, 2019) in general and digital entrepreneurship (Chalmers, MacKenzie, & Carter, 2020; Nambisan, 2017), in particular by highlighting the organisational factors that shape top management focus on digitalisation. We show that top managers in SMEs are dependent on entrepreneurial strategy processes (Ott, Eisenhardt, & Bingham, 2017) that create new practices needed for digitalisation through bottom-up entrepreneurial initiatives (Bingham, Howell, & Ott, 2019; Floyd & Wooldridge, 1999). We contribute to the strategy process literature more broadly by identifying organisational secrecy as a critical impediment to strategic transformation. As such, study three shows that a culture of secrecy may confound top management’s strategic priorities by inhibiting them from identifying and developing entrepreneurial initiatives that cut across organisational units.

Study one was mainly designed to address research question a and d: What practices are enacted by organisational members at various levels and functions that bring about unsanctioned management innovations? How do social and affective mechanisms enable or disable the performance of unsanctioned management innovation activities? Study two and three addressed research question b: How are these practices distinguished in various cultural and political organisational environments? Study 3 addressed question c: How do innovators select, use, appropriate, and modify tools and techniques in unsanctioned management innovation practices?

Hence, the three studies were designed to capture the organisational level, cultural and institutional, and material (digital) aspects to unsanctioned practice innovation. Indeed, the published findings offer several routes for future research, which can be explored further in individual papers.

In an attempt to create a broader debate on how unsanctioned practice innovations are created, a conference track was arranged at the 2019 EGOS Colloquium under Sub-theme 24 with the title: “Challenging Organisations from Within: Novel Management Practices and Unsanctioned Organizational Change” [Link]. The Sub-theme attracted no less than 22 paper submissions, and the final programme comprised 15 papers addressing seven different aspects of unsanctioned practice innovation.

This project has resulted in published papers and pending reviews on submitted papers to highly prestigious international peer-reviewed journals, presentations in academic conferences, and several co-authors from the UK and Finland.

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