Sources of Discontinuance of Managerial Innovations in Service Organizations

Damanpour, F, Magelssen, C, Walker, R M, Chen, W and Dong, B (2023) Sources of Discontinuance of Managerial Innovations in Service Organizations. Academy of Management Proceedings, 2023 (1). ISSN 2151-6561

Abstract

We extend the innovation adoption process of initiation, adoption decision, and implementation to the post-implementation decisions of discontinuance, theorizing that discontinuance can occur through replacement (substitution with a new practice) and retraction (return to the original practice). We investigate the role of rational and institutional factors in the decision to discontinue managerial innovations. Our theory suggests that from a rational perspective, environmental factors will influence organizations’ decisions to discontinue innovations while from an institutional perspective will reduce the likelihood of discontinuance. Moreover, we argue that organizations learn from adopting innovation, and this learning alters the effects of rational factors on discontinuance over time. For the empirical analyses, we constructed an eight-panel dataset (1982-2017) consisting of 2,228 public service organizations and tracked their managerial innovation over time. The findings indicate that the supplier market, innovation costs, and lack of social approval for an innovation significantly influence the decision to discontinue an innovation. The results also provide evidence that the influence of rational factors on discontinuance declines over time. We contribute to the literature by developing a theory of discontinuance after the innovation is fully implemented and put into use and exploring the modes of discontinuance of replacement and retraction.