Exploring the interplay between corporate innovation, risk management and internal governance

Abstract

Business leaders no longer question whether it is necessary to innovate but rather, which activities to pursue. While innovation is an imperative for organisations, it is inextricably linked to risk-taking and is compounded by high levels of innovation failure rates. Therefore, there is a clear requirement to understand the interplay that risk management and governance have in shaping the design of the innovation process. The aim of this research is to explore the relationship between corporate innovation management, internal governance and risk management, and to understand the dynamics between these constructs. The intention is that this contributes to the effectiveness of organisations when undertaking innovation activities by using adequate risk management and governance controls. An exploratory research method was adopted based on an inductive reasoning approach to gain insight into this interplay. Thirteen semi-structured, in-depth interviews were conducted with senior experts across six industries. The respondents had high levels of seniority, ranging from C-suite executives, managing directors and other executives, to senior managers. Thematic analysis was used to analyse the data. A conceptual integrated innovation management model was carefully formulated based on the findings to embed risk management and governance within the iterative innovation process, which is influenced by the contextual attributes. The results found that risk management and governance remain key tools to manage innovation and become more significant as the innovation evolves. This research will assist organisations in managing innovation uncertainty using adequate risk management and governance controls for improved sustainability.