Making the shift

Sammanfattning: In this study we explore how a company meets the challenge of changing their balance from incremental to more radical innovation. When faced with the challenge of new technology, climate change, and digitalization, several industries need to change their core business in order to stay relevant. Through an in-depth single case study of an automotive manufacturer we study what challenges a company experience in the transition from exploitative to explorative innovation in order to reach organizational ambidexterity, as well as what changes a company can implement to overcome these challenges. To study these issues we use an extended version of Bower's (1970) resource allocation framework. For a long time it has been known that the capital budgeting methods recommended by theory have a negative impact on explorative innovation. However, we discover multiple non-financial aspects that influence the investment process. A risk-averse culture and long lead times both have a negative impact on explorative innovation. Another crucial aspect is the selling of capital investments where decisions are often made in informal environments rather than in formal decision-making forums.