Abstract
Researchers and practitioners alike agree that for companies to survive and thrive they must develop and support radical innovation. However, these ideas are complex and risky, and not all succeed. Because of this, decision makers are often left to make hard decisions in terms of which ideas can move on and which are abandoned. The goal of this article was to provide evidence on the impact of individuals’ preferences for creativity on the effectiveness of their decision making for radical ideas using principles from signal detection theory (SDT). To do this, we used data from a previous study of 2252 idea evaluations by engineering students and classified these decisions based on SDT to see if we could predict the likelihood of occurrence of hit (correct identification), miss (type 1 error), false alarm (type II error), and correct rejection. The results showed that lower levels of risk tolerance resulted in an increased likelihood that a hit occurred. On the other hand, higher levels of motivation resulted in an increased likelihood of a type I error occurring, or that an individual would more likely neglect a good idea that had a high chance of future success. Finally, increased risk tolerance resulted in an increased likelihood that type II error occurred, or that an individual would expend resources on an idea with limited likelihood of success. The results serve as empirical evidence on decision making in radically innovative tasks and provide a methodology for studying decision making in innovative design.
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