Sustaining Innovation Starts with Self-Efficacies

By tommy

Aiming to stay competitive, smart organizations were striving to continuously reinvent their processes, products, and services long before the COVID-19 outbreak. The importance of innovation, especially digital innovation, has been dramatically increasing for years, driven by the growth of digitized business ecosystems, not to mention pressing social and environmental challenges that call for responsible business action, and a shower of technology-enabled business models and fast-evolving digital technologies.

Unfortunately, as organizations invest in technology training and design their organizational structures to facilitate innovation, they often forget to pay enough attention to the central role that the innovator plays in driving innovation. This is especially problematic today, since economic growth in the digital era depends in no small part on sustained innovation, and as we all work toward returning to a more traditional operating environment, sustaining innovation will only get harder.

If the pandemic proved anything, it is that there is nothing like necessity when it comes to mothering innovation. But whether driven by crisis or not, individuals are the atomic actors of every organization and innovation begins and lapses with them as a result. As a PwC paper noted half a decade before the pandemic, “Whatever technological innovations are ahead, it’s the people that will make the difference between eventual success and failure. That’s why CEOs need a people strategy for the digital age.”

Another critical thing to keep in mind is that digital technologies are different from traditional technologies because they have distinct and unique features (they are modular, scalable, readily recombined, and built into digital platforms). As a result, digital innovators are different from traditional innovators. And that means developing them requires different training and education.

That’s something organizations clearly must keep in mind as they make plans for the post-COVID world—when employing individuals who are truly capable of innovating with digital technologies will be more important than ever before. Another critical thing to keep in mind is that digital technologies are different from traditional technologies because they have distinct and unique features (they are modular, scalable, readily recombined, and built into digital platforms). As a result, digital innovators are different from traditional innovators. And that means developing them requires different training and education.

Traditionally, information technology education has focused on developing a basic understanding of the technologies deployed instead of learning technologies through experimentation. But while the process of innovating with digital technologies requires supporting resources and organizational processes, it is important to note that knowledge about digital technology can be acquired as part of the innovation process. Success depends on having people skilled at using digital technology to meet a business need, solve a business problem, or seize a business opportunity.

In our role as business educators, we focus on developing business leaders who can tackle known and unexpected challenges via digital innovation. As defined by Peter Drucker, innovation typically results from the systematic exploration of opportunity rather than flashes of genius. When innovation spans into the digital domain, it becomes digital innovation. For this paper, we define digital innovation—which typically incorporates or is powered by information technology—as the novel application of digital technologies resulting in new products, processes, or business models.

Because we believe individuals can be trained to be better innovators, we recently explored the role that four different workforce factors—digital literacy, entrepreneurial orientation, entrepreneurial self-efficacy, and digital technology self-efficacy—play in digital innovation. We surveyed 131 undergraduate and 120 graduate students who were enrolled in experiential technology courses and expected to join the workforce in one or two years. As noted in our paper “Making a Digital Innovator: Antecedents of Innovativeness with Digital Technologies,” we found that a basic understanding of digital technologies is not associated with innovativeness with digital technologies. This is due, we argue, to the fast pace of technological progress, plus the way learning about technology also imprints on us the context in which the technology operates, constraining our ability to see it in other contexts.

We also found that the intention to become an entrepreneur (and related traits such as risk proclivity and proactiveness) does not relate to a higher degree of digital innovativeness. But while we found that basic digital literacy and individual entrepreneurial orientation were not significantly associated with digital innovativeness, both entrepreneurial self-efficacy and digital technology self-efficacy were significantly and strongly linked to a greater level of digital innovation, which suggests that self-efficacies can be a major part of academic and workforce (re)training programs.

As broadly defined by psychologist Albert Bandura, self-efficacy is an individual’s belief in their ability to accomplish tasks, which is developed from external experiences and self-perception. Notably, an individual’s self-efficacy is a factor that determines the outcome (success or failure) of activities that the individual undertakes. According to Bandura, individuals with high self-efficacy perceive challenging endeavours as something to master and successfully complete, rather than something to avoid. As noted above, our research looked at two, more narrowly defined variations of self-efficacy: entrepreneurial self-efficacy and digital technology self-efficacy.

Entrepreneurial self-efficacy is an individual’s belief in their capability to perform the roles and behaviours of an entrepreneur (management, marketing, financial control, etc.). This self-belief is vital for digital innovation, as digital innovation is not just about finding an innovative use for digital technology but also about translating this innovation into a business advantage, which requires entrepreneurial action to muster resources. It is both about planning and executing the plan. Fostering individuals’ entrepreneurial self-efficacy is critical in bringing out the digital innovators within an organization’s workforce.

While entrepreneurial self-efficacy provides the drive, digital technology self-efficacy provides the resourcefulness with technology needed to plan and execute digital innovation. Introduced by academics Simon Cassidy and Peter Eachus, the notion of Computer User Self-Efficacy (CUSE) was designed to measure the self-efficacy of an individual in computer-related tasks. Digital technology self-efficacy is a modified version of CUSE that measures individual self-efficacy with digital technologies. Developing this self-belief in the ability to innovate by applying and leveraging digital technologies is the second critical piece in cultivating a digital innovator.

Building on our research, we have identified four principles that educational institutions and companies can follow to design academic and training programs that prepare digital innovators.

Experimenting with digital technologies, not just understanding them, promotes digital technology self-efficacy: The training programs that singularly emphasize the transmission of knowledge about technology are bound to be ineffective in incubating digital innovators. Research that praises the positive role of practice in building skills (and points to the inadequacy of lectures in skill development) proves that experiential learning should be the norm. We posit that course projects and training that are built on experiential learning will foster self-efficacy, especially in digital technologies. For instance, learning some electronics helps individuals understand the behaviour of Internet of Things (IoT) technologies and experiment with them. But to innovate, individuals must creatively identify business processes that are supported by and benefit from these digital technologies. The individual must be able to conceptualize relevant business strategies to implement the technology and associated processes to capture value. It is critical that individuals know how the process of innovation works, both technically and practically. This learning, imparted through experimentation with digital technologies, is central to furthering the individual’s digital technology self-efficacy.

Seek to grow entrepreneurial self-efficacy: We need programs that provide individuals not only with the foundation of self-efficacy in digital technologies but also promote the growth of entrepreneurial self-efficacy. They then promote competency in designing business strategies that leverage digital technologies. Learning through experimentation how to leverage digital technologies to design and improve processes and define new ways to create, capture, and deliver value promotes entrepreneurial self-efficacy. As evidenced by our research, digital literacy alone does not have any bearing on digital innovativeness. It is not just the learning of digital technologies that fortifies the self-efficacies (digital technology and entrepreneurial) necessary for digital innovation, but the combination of this learning with active experimentation involving applying the learning to identify, design, and test business processes.

Rely on experiential learning frameworks: Kolb’s experiential learning cycle informs us how to create environments that foster entrepreneurial and digital self-efficacy in individuals. Kolb organizes experiential learning into four sequential phases. In the phase that Kolb refers to as “concrete experience,” individuals get the opportunity to experience the role of digital technologies in a business context—be it a new business model or a revolutionary change in business processes. In the next phase, “reflective observation,” individuals get to observe a different organization or business unit in the process of using digital technologies in an attempt to achieve some objective. Following this observation, the individuals get to think about how they may leverage digital technologies through creative ideation, a phase that Kolb calls “abstract conceptualization.” Then, the experiential learner “actively experiments” by testing out ideas, and the cycle continues as a continuous improvement process.

The phases “abstract conceptualization” and “active experimentation” push the individual to entrepreneurially ideate and test applications of digital technologies in business. The continuous improvement supported by Kolb’s cycle increases the confidence of the individual with digital technologies (digital technology self-efficacy) and their confidence in their ability to successfully execute its application in business settings (entrepreneurial self-efficacy). Academic curricula and training programs following this learning cycle promote self-efficacies and train digital innovators.

Follow management methodologies that support experimentation, reflection, and iteration: Self-efficacies must be continuously built. Agile methods such as SCRUM and FLOW support experiential learning and tie its experimentation and reflection elements with the business context in which the digital innovation must take place. One must design experiential learning and training programs, and the day-to-day work environment, around these methodologies.

Even decent innovators can become better innovators. We need digital innovators to identify and exploit the digital innovation opportunities that exist in all industries today.

As Brian L. Dos Santos, Robert G. Fichman, and Zhiqiang (Eric) Zheng note in “Digital Innovation as a Fundamental and Powerful Concept in the Information Systems Curriculum,” the ongoing march of Moore’s Law has blessed today’s organizations with “a relatively cheap and increasingly easy-to-use world-wide digital infrastructure,” which has, in turn, accelerated the emergence of new technologies that enable transformations in how we live and work, how companies organize, and the structure of entire industries. As a result, the authors conclude, “It has become increasingly important for all business students (MBAs and undergraduates alike) to have a strong and appropriate grounding in IT in general and digital innovation in particular—in order to manage, lead and transform organizations that can benefit from digital innovation.”

But while technology is continually evolving and changing the business landscape, it is people, not the byproducts of Moore’s Law, who drive innovation. And according to our research, a basic understanding of digital technologies is not associated with innovativeness with digital technologies. Meanwhile, an individual’s reliance on and belief in one’s self-efficacy in the context of both the entrepreneurial endeavour and the use of digital technology is a critical factor that predicts their ability to innovate in the digital realm. As a result, organizations should educate and train individuals to be more entrepreneurial and confident in their abilities to understand, create, and successfully deploy digital technologies. By empowering an individual’s entrepreneurial and digital technology self-efficacies, organizations can secure their competitive strategic position in a world driven by digital innovations.


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