The role of climate for innovation in enhancing business performance

Abstract

Purpose-Innovation and the process of diffusion have been widely acknowledged as hinging upon the complex social psychological process. Invariably, such a process manifests itself in the form of "climate" in an organisation, which influences people's behaviours. The purpose of this paper is to empirically investigate the roles of a facet-specific climate, namely "climate for innovation" in determining innovation-related outcomes. In particular, this paper focuses on interrelationships and roles of specific constructs forming such climate. Additionally, this paper attempts to determine the efficacy of innovation by examining the relationship between outcomes of innovation diffusion and business performance. Design/methodology/approach-A conceptual model incorporating three climate for innovation constructs including leadership, team, and organisational culture along with two constructs addressing innovation diffusion outcomes and business performance was developed. Statistical analyses, specifically exploratory factor analysis (EFA) and structural equation modelling (SEM), were conducted based on the data collected from a questionnaire survey of 181 design professionals employed in Australian architecture and engineering design (AED) firms. EFA was employed as a preliminary step to ascertain the factors underlying each construct, and SEM was sequentially utilised to determine the factor structure of the model and to assess the relationships between model constructs. Findings-The results revealed that perceived organisational culture functions as a gateway to the diffusion of innovation, by mediating the relationships between leadership and team climate, and innovation diffusion outcomes. More importantly, it was found that all pathways to innovation diffusion outcomes originated from the leadership construct, highlighting its critical role in creating a supportive culture that fosters and nurtures innovation. Finally, the findings warranted the benefits of innovation by demonstrating its significant contribution to business performance in AED firms. Originality/value-The study presents an empirically developed model depicting pathways that explain the mechanisms of climate for innovation constructs in determining the degree of innovation diffusion outcomes and business performance. The model can potentially form the foundations of a framework for firms seeking to diagnose their existing condition and use such findings to enhance the diffusion of innovation which could, in turn, strengthen their business performance.

Exploring leadership styles for innovation: an exploratory factor analysis

“…Leadership is one of the most critical predictors when considering the degree to which subordinates strive for creativity and innovation (Amabile et al, 2004;Panuwatwanich et al, 2008). For example, Kim and Lee (2009) investigated management capacity in the innovation process in the Korean public sector and highlighted the importance of innovative leadership on the adoption and implementation of innovations.…”

Influence of Organisational Culture on Total Quality Management Implementation and Firm Performance: Evidence from the Vietnamese Construction Industry

“…The primary purpose of SEM is to test the validity of the hypothesised theoretical model by specifying, estimating and evaluating the linear relationships between a set of observed and unobserved variables [36]. The strength of SEM is that it can offer a straightforward procedure to test the relationships among latent or unobserved variables that are measured by multiple indicators while other general leaner modellings (GLM) such as ANOVA or multiple regressions cannot perform in unobserved variables [38].…”

“…Skewness refers to the symmetry, whereas kurtosis refers to the pointiness of the distribution [35]. According to Panuwatwanich [36], skewness and kurtosis indices that fall within the range of -2 to +2 indicate a normal distribution. The Analysis of Variance (ANOVA) is performed to compare different respondent groups to determine whether or not the data are homogeneous across all groups.…”

“…Model fit assessment refers to the extent to which hypothesised model fits the data, whereas unidimensionality refers to how well a set of measured variables can exist in a single underlying construct. The unidimensionality can be established when the fit indices satisfy their respective criteria [36].…”

The social life of the novel idea: what did social psychologists ever do for us?

“…This is known as 'social tuning' where group norms and values -which may either foster creativity/originality or convergence/conformity -evolve from intra-group validation and reinforcement (Adarves-Yorno et al, 2007;Bechtoldt et al, 2010). This is observed in a study of team climate in Australian architecture and engineering design teams where organisational culture and leadership were found to have a key role to play in fostering innovation in their ability induce a team climate that was supportive of and receptive to innovative performance (Panuwatwanich et al, 2008).…”