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1. Introduction
Companies have to innovate in order to survive ([44] Taplin and Schymyck, 2005) and in economic recessions innovation can help convert a crisis into an opportunity ([31] Mahroum, 2008; [30] Lazzaron, 2010). However, in such turbulent times add further risk to that inherent in innovation ([55] Zhao, 2005; [50] Wang et al. , 2010) and product innovation is recognised as an especially high-risk business activity ([43] Stevens and Burley, 1997). Greater competition, rapidly changing technology and customer expectations tend to make innovation more complex with less predictable outcomes ([28] Keizer et al. , 2005), increasing the innovator's exposure to risk ([5] Berglund, 2007). While companies should not pursue a strategy of risk avoidance, better project risk diagnosis and management might help adjust the balance between success and failure. More extensive use of explicit risk management might reduce expenditure on failed innovations and also accelerate projects ([32] Mu et al. , 2009; [26] Johnson, 2010). But too much or inappropriate risk management could discourage and stifle innovation ([44] Taplin and Schymyck, 2005): a balance is needed. Many organisations recognise the need for a risk management system integrated within project management in general ([53] Williams, 1995; [17] Emblemsvåg and Kjølstad, 2006) but this practice is rarely explicit in innovation management.
The main objective of this paper is to consider whether the concepts of project risk management have a role in innovation. The paper explores inter-relationships between models of innovation and project risk management, developing an integrated framework. The framework is then used to examine attitudes to innovation project risk management through a series of five case studies. The studies involved interviews with a range of staff in each company reflecting the roles of different management functions in the innovation process. The experience suggests that the combined framework is relevant in diverse industries and may help to bridge the gap between project risk and innovation management. The paper also offers some more specific recommendations: comprehensive, rigorous risk management can be appropriate at some stages, in some innovation projects, but simpler risk management tools may often be more effective.
2. The need for risk management in innovation
Innovation is the use of newly acquired knowledge in developing a new product or service ([2] Afuah, 2003). Novelty is...