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This chapter seeks to advance the neglected debate on the ethical issues between formal organization and practice arising from innovation in an organization. To that end, the chapter discusses the sources of possible moral dilemmas for practitioners who belong to a practice with a shared identity, values, and standards of excellence, and who need to conform to new rules of formal organization. While formal organization ideally strives for generalized fairness principles for all organizational members when introducing an innovation, the contextualized nature of practices may lead to particular needs and goals of the practice which can only be recognized as such by practitioners and not by formal management, and to which procedural justice cannot respond. The chapter proposes how practitioners may interpret moral dilemmas, aligned with their practice-based identity and ethical values, and what options for action they may seek. The discussion is illustrated with examples of innovation in the field of information systems design.