The Impact of Goal setting in Innovation efforts on Resource allocation

Abstract

The purpose of this study is to examine the impact of goal setting in innovation efforts on resource allocation, in order to clarify the differences between companies that proactively allocate resources for their business’s innovation efforts and companies that do not. In this study, innovation is not limited to research and development efforts. It includes a series of efforts to create new value through innovative methods that will lead to solutions to issues of society and customers, and to gain cash through the penetration and diffusion of such methods to society and customers. When a company promotes innovation efforts, legitimacy of resource allocation is crucial for its realization. If necessary resources are not acquired, it will not yield commercialization regardless of how exceptional the ideas are, and the company will fall into “death valley” . What are the reasons behind the existence of companies that proactively allocate resources to their innovation efforts and companies that do not? If “pragmatic legitimacy” can be ensured in innovation efforts, resource allocation will become possible. Innovation cannot be realized without both the acquisition of resources from inside and outside of the organization and legitimacy of the activity. If there are any means to achieve legitimacy of the innovation efforts in the most comprehensive manner in a short span, they will be through the decision making and direction setting of top management. When skillful top management incorporates innovation efforts into business strategy on a mid-long term basis and sets organizational goals, such efforts will be recognized internally and innovation efforts will then be “legitimized.” As a result, the possibilities for resource acquisition will increase. This study clarifies whether or not setting goals by top management legitimizes their innovation efforts, which will then lead to resource allocation.