Is There a Doctor in the House? New Ventures, Product Users in Organizational Roles, and Innovation

Drawing on theories of resource dependence and organizational roles, we explore the impact on innovation that professional users of a product have as inventors, executives, and board members in a young firm. In contrast to... [ view full abstract ]

Drawing on theories of resource dependence and organizational roles, we explore the impact on innovation that professional users of a product have as inventors, executives, and board members in a young firm. In contrast to prior literature, which has emphasized technology roles, we put the spotlight on the executive and governance roles that many professional users take in young firms. Using an extensive custom-collected dataset of 231 surgical instrument ventures over a 25-year period, we find that users strengthen innovation in some roles but block it in others. Physician-users are related with the increase in a firm’s innovation when they take a technology role as inventors, and particularly when they take a governance role on the young firm’s board. However, despite their frequent involvement in executive roles, physician-executives are less likely to help young firms innovate and are especially likely to block innovation as chief executives. Our results emphasize users as a critical external dependency for a young firm’s innovation, but show that a mismatch with a particular organizational role may have unanticipated negative effects on innovation.