Innovate and Tell? Managing secrets in a complex world

Abstract

Innovation disclosure is the topic of this study, which in spite of the importance acknowledged to innovation has remained relatively unexplored. Adopting a qualitative research strategy and a multiple case study method, the aim is to provide a managerial view of innovation disclosure and the paradox between secrecy and transparency. The case companies of this study are Volvo group, Husqvarna group and SCA. While innovation to its nature is associated with the need of secrecy to ensure appropriability, this also leads to information asymmetry between management and owners, causing agency costs. Companies will make voluntary innovation disclosures to reduce information asymmetry to a level where agency costs and proprietary costs are balanced. Moreover, theory implies that beside the need of shareholders, other stakeholders’ need will also affect how the companies’ handle innovation disclosure. Findings None of the three case companies have an explicit innovation disclosure strategy, instead handling the paradox case by case. Industry specifics play a big role in deciding the level of disclosure and transparency. Our findings corresponds with existing theory regarding that companies in high-tech industries have greater possibilities of disclosing innovation-related information compared to companies in the Fast-mover-consumer-goods industry. Furthermore, the case companies acknowledge a trend towards more openness. The main driver of this development is the increased technological complexity many industries are facing. This complexity is often linked to major trends of connectivity, digitalisation and electrification, implying an increased need of partnership which naturally spurs transparency. Contributions This study has illuminated a relatively scarcely researched topic in a new way, by using a qualitative research method as most previous studies have used a quantitative method. We believe that this study will give interesting and valuable insights, both for academia and practitioners aiming to form a strategy or policy regarding innovation disclosure.