Organizational Innovations of the 20th Century as High Tech of the 21st: Evidence From Patent Data

Abstract

Organization theorists have long claimed that organizational innovations are nontechnological, in part, because they are unpatentable. The claim rests on the assumption that organizational innovations are abstract ideas embodied in persons and contexts rather than in context-free practical tools. However, over the last three decades organizational knowledge has been increasingly embodied in digital tools which, in principle, can be patented. To provide the first empirical evidence regarding the patentability of organizational innovations, we trained two machine learning algorithms to identify a population of 205,434 patent applications for organizational technologies (OrgTech) and, among them, 141,285 applications that use organizational innovations accumulated over the 20th century. Our event history analysis of the probability of patenting an OrgTech invention shows that ideas from organizational innovations decrease the probability of patent allowance unless they describe a practical tool. We conclude that the present-day digital transformation places organizational innovations in the realm of high tech and turns the debate about organizational technologies into the challenge of designing practical organizational tools that embody big ideas about organizing. We outline an agenda for patent-based research on OrgTech as an emerging phenomenon.

Keywords: organizational innovation, organizational technology, high tech, patents, machine learning

JEL Classification: M15, O32, O34