Cognitive and structural antecedents of innovation: A large-sample study

Paper highlights

Adopting a disruptive innovation and implementing it successfully are separate problems. The people and structures that make a firm likely to adopt may not be the ones that produce the best results afterward. This study documents those differences during the video game industry’s shift toward free-to-play business models.

The findings also challenge the simple claim that hierarchy suppresses innovation. In this setting, firms with more supervisory levels were more likely to adopt free-to-play and performed better after adopting it. The likely reason is that the new model increased uncertainty and information-processing demands, making coordination useful.

Study design

The dataset covers 461 video game firms employing 83,157 people during 2012–2015. Employee job histories provide measures of experience breadth and depth; job titles reveal hierarchy and differentiation. Product data show whether firms adopted free-to-play and how their games performed under the old and new regimes.

Results at a glance

• Cognitive and structural characteristics had different, sometimes opposite, relationships with adoption, implementation under free-to-play, and performance under the existing model.
• Specialized experience was associated with adopting and succeeding under the new regime; broader experience helped firms that stayed with the existing regime.
• Taller hierarchies were associated with both adoption and implementation of the disruptive model.
• Cognition and structure compensated for one another in some parts of adaptation, but not in all of them.

Why it matters

• Adopting a disruptive model, implementing it, and performing under the established model are distinct outcomes with different organizational antecedents.
• Experience profiles shape the cognition available inside the firm; reporting relationships shape how that cognition is coordinated.
• Hierarchy can help when implementation requires coordinated changes across pricing, product design, analytics, and development cadence.

How to use this paper

Cite this for

• Large-sample evidence on cognitive and structural antecedents of adaptation to a disruptive business model.
• The distinction among adoption, implementation under the new regime, and performance under the existing regime.
• A setting where hierarchy is associated with innovation adoption and implementation rather than only inertia.

Useful for teaching

• Why adopting an innovation and succeeding with it should be analyzed separately.
• How employee experience profiles and formal structure can affect different stages of adaptation.
• How the same organizational feature can help in one performance regime and hurt in another.

Careful claim

In the video game industry’s move to free-to-play, cognitive and structural features predicted adoption and implementation differently; the hierarchy result should not be generalized into a claim that hierarchy always helps innovation.

Abstract

This paper studies how cognitive and structural antecedents affect adaptation to disruptive innovations. We do so by analyzing how video game firms adapted to the “free-to-play” business model around the period of disruption (2012–2015). Our dataset (which contains 461 firms, collectively employing 83,157 individuals) allows us to characterize each firm’s organizational structure and each employee’s experience profile; it also captures the performance of firms under the existing and new technological regimes (that is, firms that do and do not adopt the disruptive innovation).

We show that adoption, implementation under the existing regime, and implementation under the new regime are affected by cognitive and structural antecedents in different and often opposite ways. We also point out conditions under which cognitive and structural antecedents can compensate for each other. Overall, our study contributes to a better understanding of how firms should organize to face disruptive innovations.

Other links

• SSRN preprint

Last updated 2026-06-21