Innovation from differentiation: pollution control departments and innovation in the printed circuit industry

Theory predicts that managers will create specialized boundary-spanning departments to insulate a firm from changing surrounding conditions. Theory also predicts such insulating structures will inhibit adaptation. The author has found that in response to changing water-pollution regulation, top managers indeed created specialized pollution-control departments to insulate the existing process, but some of these departments acted not as insulators but as conduits for information and thereby helped both to improve the efficiency of the production process and to reduce pollution. The special role of these departments allowed unique access to and perspective on information from inside and outside the organization and gave them an incentive to use this information to improve core processes. Thus, this research suggests that pollution-control departments may belong to a class of boundary spanners that represent a special case for organizational design