ORGANIZATIONAL AND PSYCHOLOGICAL INFLUENCES ON ORGANIZATIONAL INNOVATIVENESS Salvatore ZAPPALÀ & Fabio MASSEI University of Bologna – Italy XXXIII Joint IAREP/SABE colloquium Rome. 3-6 September 2008

OUTLINE OF PRESENTATION 1)Introduction 2)A Definition of Organizational Innovation 3)Antecedents of Innovation 4)The research 5)Main measures 6)Results 7)Comments and conclusions

1) INTRODUCTION “... In the current wave standards of costs, reliability, functionality, quality of goods and services can, at best, ensure survival; they are no longer able to differentiate companies…. As a result, innovation... has become one of the key avenues to achieve differentiation.” Rajan. A. (2001) Centre for Research in Employment and Technology in Europe.

2) A DEFINITION OF ORGANIZATIONAL INNOVATION Innovation “is the intentional introduction and application within a role, group or organization of ideas, processes, products or procedures, new to the relevant unit of adoption, designed to significantly benefit the individual, the group, organization or wider society” (West & Farr, 1990). Innovations include such different manifestations as technological, administrative, new products, processes, services, or systems (West, 2002; Kanter, 1988) Criteria according to West (2002) - Intentional rather than accidental - Designed to benefit someone - New to the setting of adaptation

MAIN RESEARCH APPROACHES 1) Organizational design approach: link between organizational structure, size, sector (and so on) (macro-level) and characteristics and organizational innovation (Lam. A. Working papers. 2004). 2) Organizational cognition and learning approach: link between individual and group-social processes (cognition, creativity or social support) (micro-level) and organizational capabilities to develop new ideas and innovation (Lam. A. Working papers. 2004).

3) ANTECEDENTS of INNOVATION The major components of work context facilitating development and implementation of innovations: Individual level factors Job level factors Group/team level factors Organizational level factors (Woodman et al., 1993; Amabile, 1996; Anderson at al., 2004; Shalley & Gilson, 2004)

4) THE RESEARCH: AIM and HYPOTHESIS Exploratory Research Aim: to examine if antecedents at different levels (organizational, team, job and individual) are related to different measures of organizational innovation H1.: Companies that adopt more innovations have different organizational, team and job characteristics compared to companies that adopt less innovation (Number of Innovations related to organizational psycho-social variables) H2.: Companies perceived as more innovative by the employees present more effective and innovation oriented organizational, team, job and individual characteristics (Perception of innovativeness related to organizational psycho-social variables )

Sample: - 10 owners’ company (one owner for each company) located in Bologna and Forlì, in different sectors. Size: from 6 to 100 employees employees (on average 15 respondents for company; range: 5 – 41). Age: 36% (20-30 y. o.), 44% (31-40), 11% (41-50), 9% (51-70) Sex: Men 59%, Female 39%, Missing 2% Seniority: mean 82 (months; almost 7 years), s.d. 77. (range 1-336) Education: Secondary sc. 16%, High sc. 54%, College 30% We developed two questionnaires: - for the employer/s, to collect information about the company and data about the number of innovation adopted in the last two years; - for the employees, to collect data about organizational, team, job and individual characteristics. THE RESEARCH: METHOD and SAMPLE

5) MAIN MEASURES: PREDICTORS -Individual level Intrinsic motivation: “the motivation to do an activity for it’s own sake. because it is intrinsically interesting. enjoyable. or satisfying” (Tierney & Farmer. 2002). Creative self-efficacy: “the belief that one has the ability to produce creative outcomes” (Tierney & Farmer. 2002). -Job level Job demands: time pressure and challenges (The Copenhagen Psychosocial Questionnaire – COPSOQ. National Institute of Occupational Health. Denmark). Autonomy: job discretion and influence on decision related to the work (COPSOQ). Skill variety: activities that challenge skills and abilities (COPSOQ). Creativity goals: relevance of creativity to achieve the job objectives (items based on Loke’s Goal theory. developed by Gro Ellen Mathisen).

- Team level Leader support: “Supportive Supervision” (Oldham & Cummings. 1996). Leader-member exchange (LMX): quality of the relationship between supervisor and employees (Tierney & Farmer. 1999). Coherence: coherence between the inputs that the supervisor sends and his/hers actual actions (developed by GEM ). Supervisor developmental feedback: leader’s feedback which is oriented towards development (Zhou. 2003). -Organizational level Openness to change: organizational readiness to changes (adapted from Siegel & Kammerer. 1978). Resource availability: access to resources. material. time expertise (developed by GEM). Handling risk: 1) Risk : encouragement of risk taking for developing new ideas) 2) Error : mistakes tolerance (adapted from Caldwell & O’Reilly. 2003). Systems for receiving and supporting ideas and suggestions: availability of procedure to present and develop new ideas (developed by GEM). Size/Dimension: number of employees. MAIN MEASURES: PREDICTORS

MAIN MEASURES: INNOVATION OBJECTIVE MEASURES – QUESTIONNAIRE FOR THE OWNER - Adoption rate/number of innovations (Mohamed, 2002) : Service inn.: introduction of new types of services to respond to the demands of customers or clients Process inn.: adjustments of work allocations and changes in work processes Administrative inn.: novel ways of managing the work processes (ex. New management tools, new evaluation systems.) Operational inn.: new equipments and tools Product inn.: new products or significant improvements of existing ones. Marketing inn.: new ways of marketing products or services. - Patent disclosures (Oldham & Cummings, Jung et al., 2003) - R&D intensity (Jung et al., 2003) SELF-REPORTED MEASURE (rated by employees and companies owners): - Innovative behaviour measure to evaluate organizational innovative behaviours (based on Scott & Bruce, 1994).

6) RESULTS: OBJECTIVE MEASURES of INNOVATION

RESULTS: TYPES of INNOVATIONS

RESULTS: ORGANIZATIONAL LEVEL Averages (scale 1-7). MeanS.D.Alpha Innovation adopted (number) R&D expenditure (percentage of the total incomes) Innovation behaviour, owner evaluation Innovation behaviour, employees evaluation Job demands Autonomy Skill variety Creativity goals Leader support Leader-member exchange (LMX) Coherence Supervisor developmental feedback Openness to change Resources availability Risk Error Systems for receiving & supporting ideas Size of the company (Employees number )

Innovation Adopted R&D expenditure Innovative beh., owner evaluation Innovation Adopted R&D expenditure.388 Innovative behaviour, owner evaluation.711*.096 Innovative behaviour, employees evaluation * RESULTS: ORGANIZATIONAL LEVEL Objective Measures of Innovation, Correlations. T-test showed no difference between companies reporting more and less innovations on all variables. H1 not confirmed. *p <.05; N = 10

Innovation adopted R&D expenditure Innovative beh. owner evaluation Innovative beh. employees evaluation Job demands.63* ** Autonomy Skills variety *.67* Creativity goal * Leader support LMX Coherence Super. feedback Openness to change Resources **.74* Risk Error.67* Support Ideas *.80** Size/ N^ Employees ** RESULTS: ORGANIZATIONAL LEVEL Predictors and Innovation Measures, Correlations. *p <.05; **p <.01

RESULTS: INDIVIDUAL LEVEL. Correlations between Employees Evaluation of I.B. and Predictors I.B. I.M.C.S.J.D.Aut.S.VC.GL.S. LMX Co.S.FO.CRe.Ris.Err. Innovative b., emp. Ev. Int. motivation.40** Creative self-effic..35**.63** Job demands.20*.42**.30** Autonomy.35**.33**.18*.17* Skills variety.49**.37**.27**.43** Creativity goals.58**.32**.22**.28**.43**.62** Leader support.40**.17* **.35**.45** LMX.38**.31** **.36**.45**.67** Coherence.40**.18* **.41**.48**.49**.50** Super. Feedback.36**.25** **.38**.46**.77**.65**.49** Op. to change.51*.52**.20*.23**.35**.39**.49**.33**.38**.29**.35** Resources.43**.25**.28**.02.47**.41**.46**.39**.33**.35**.43**.36** Risk.29**.40**.15.29**.33**.40**.36**.25**.29**.26**.36**.61** Error.34**.24**.15.22**.32**.27**.15.30**.26**.18*.24**.25**.36** Support Ideas.52**.39**.28**.27**.43**.58**.68**.55**.49**.52**.57**.51**.23**.26**.25** *p <.05; **p <.01 N = 158

RESULTS: INDIVIDUAL LEVEL Hierarchical Regression: Employees Evaluation of Organizational Innovativeness regressed on Organizational, Team, Job and Individual, Characteristics StepPredictorR2 RR 1 Control variables (firm, education, age, seniority, sex) * 2 Individual characteristics (intrinsic motivation, creative self-efficacy) * 3 Job Characteristics (job demands, autonomy, skill variety, creativity goals) * 4 Team Characteristics (leader support. LMX, coherence, supervisor developmental feedback) * 5 Organizational characteristics (openness to change, risk. error, support ideas) *p <.01

RESULTS: INDIVIDUAL LEVEL Stepwise Regression Analysis: Employees Evaluation of Organizational Innovativeness regressed on Organizational, Team, Job and Individual, Characteristics Step1Step2 Predictorββ Control variables Firm Age Seniority Sex Education -.33* * Creativity goals Leader support Creative self-efficacy Openness to change.29*.21*.28*.29* R2 F * **p <.001 H2 partially confirmed.

7) COMMENTS and CONCLUSION 1)The different measures of (Organizational) Innovativeness are partially related among them, and differentially related to structural and organizational variables - this could have implications for the surveys conducted at inter/national level on innovativeness. 2)As reported in other Italian studies, Italian SMEs innovativeness is mainly related to new products (but some companies are customers oriented and work on ‘prototypes’) and improving processes (methods and equipments) to facilitate employees’ work and efficiency. 3) Splitting the sample between companies reporting more and less innovations does not show any differences in the predictors – thus Number of Innovations (Inn. Adoption and Implementation) is not related to intra-organizational processes, but probably to the maturity of the sector, to owner characteristics, financial availability or support, or something else.

COMMENTS and CONCLUSION 4) In general, employees perceive a positive psycho-social climate (related to the small company size?) 5) The companies that adopt more innovations are also more error tolerant. 6) The limited number of companies induced us to an individual level analysis; this showed Supervisor support, creativity goals and openness to change as the team, job and organizational most important variables to predict employees evaluation of organizational innovativeness. In other words: 1) different measures of innovativeness seem to be related to different aspects of organizational functioning, 2) at the psycho-social level, the employees perception of company innovativeness is related to (at least one aspect of) all the antecedent levels. In other words: 1) different measures of innovativeness seem to be related to different aspects of organizational functioning, 2) at the psycho-social level, the employees perception of company innovativeness is related to (at least one aspect of) all the antecedent levels.

Thank you for your attention.