How do managers make decisions in the face of innovation failure? From a risk governance perspective

Purpose In this study, we explore the impact of innovation failure on organizational strategy from a risk governance perspective, considering systems thinking as a mediating variable and risk perception as an essential weighting variable. Design/methodology/approach This paper conducts questionnaire research using 364 survey data from high-tech small and medium-sized enterprises (SMEs) in China. It uses a hierarchical regression approach to test an original model. Findings The results indicate that systems thinking mediates the effect of innovation failure on organizational strategy. The contingency analyses also revealed that the positive impact of systems thinking on imitation strategy is stronger at high levels of risk perception. However, the relationship between systems thinking and innovation strategy is weaker when the risk perception is high. Originality/value This paper constructs a theoretical research framework for risk governance to explore how innovation failure affects enterprises’ future organizational strategy, offering valuable insights for enterprise innovation management after innovation failure.