Enabling cost innovation by non-traditional organizational processes: The case of Chinese firms

Cost innovation has emerged as a new pattern of innovation in recent years. The extant literature has studied the preconditions for cost innovation to arise, including the availability of low-cost talent at all skill levels, state assets and intellectual property at a discount, management autonomy, and strong personal incentives to create value. Much less attention has been paid to the role of organizational processes. In this research, based on a set of Chinese firms, we investigate how non-traditional organizational processes can foster cost innovation. We find that the adoption of new or unconventional organizational processes facilitates the realization of various kinds of cost innovation. Specifically, searching innovation ideas using customer-oriented processes, selecting by pragmatic decision making, and implementing through flexible product development processes, all appear to underpin and facilitate cost innovation in our sample of firms. These findings have important implications for firms wishing to fuel cost innovation.