Conference Agenda

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Session Overview
Session
21-AM-05: ST9.3 - Organizational Innovation Development
Time:
Friday, 21/Jun/2019:
8:30am - 10:00am

Session Chair: Igor Dukeov, Lappeenranta University of Technology
Session Chair: Jukka-Pekka Bergman, Lappeenranta University of Technology
Location: Amphi Curie

Session Abstract

It was Joseph Schumpeter who introduced the term “new industrial organization”. According to the Schumpeter’s theory among the five types of innovations, he introduced one that was called “new forms of industrial organization”. The latter is nowadays understood as organizational innovation (ORI). According to the OSLO Manual the definition of ORI is as follows: “An organizational innovation is the implementation of a new organizational method in the firm business practices, workplace organization or external relations”.

In the literature, ORI has gained a minor role in studies as it is a relatively new concept to be researched and implemented. Nevertheless it still represents a broad concept which deals with issues covered by strategic management, human research management, knowledge management and other non-technological areas of firm control and evolvement. All these areas can be considered as indicators of the internal diffusion of various practices and elements of knowledge management. The effect of ORI may be visible as the increasing level of competitiveness of a firm that introduces product, process, or marketing innovations supported by simultaneously introduced ORI. This simultaneous introduction of different types of innovations may lead to the synergy of various effects.

Scholars have provided various classifications of organizational innovation in an attempt to explain and specify their characteristics in different contexts. Thus, quite a large number of definitions for ORI can be found, not to mention interpretations of the term. One can also consider different levels of ORI. For example, these may take the form of appropriate solutions on the level of particular departments or functions of a company. They can also relate to the overall structure or the functional principles of the firm. They may well be innovations that have an impact the firm’s relationship with its environment.

Despite many studies arguing that ORI should be considered as a firms’ response to technological innovation forming a pre-condition environment for it, ORI can also play its own independent role in a firm’s development and can be considered a distinct form of innovation.

Firstly, ORI might aim at implementing new procedures in processes, operations, or behaviour in a firm. These procedures could be the first introduction of a total quality management system or a PDCA cycle, or could involve just-in-time or teamwork practices that directly impact the organizational performance of the firm. Often the innovations of this type are called procedural ORIs in comparison to structural ORIs which deal with increasing the efficiency of responsibilities, accountability, divisional structure of functions, and knowledge dissemination in a firm on its various levels. Thirdly, ORI might reduce the organizational barriers of the external environment, thus facilitating enlarging the scale of the firms’ external relations with customers, suppliers, research organizations, and governmental and non-governmental institutions.

ORI may be intended to increase a firm’s performance by reducing administrative or transaction costs, enhancing labour productivity by improving workplace satisfaction, gaining access to non-tradable assets (such as non-codified external knowledge), or reducing the costs of supplies. An organizational innovation should be based on strategic decisions taken by the management of the firm to implement organizational methods in business practices, workplace organization or external relations which are new for the firm.


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Presentations

Corporate entrepreneurs as a mean to enable strategic renewal and organisational transformation

Veronika Sagmeister

Zeppelin University, Friedrichshafen, Germany

Context

Entrepreneurial orientation (EO) is an important path to competitive advantage. However, transformation to EO can be painful. Moreover, EO is the strongest when employees of all hierarchical levels are similarly motivated to engage in entrepreneurial activities. Therefore, entrepreneurial employees could be a means to induce EO more effectively and efficiently.

Literature

To successfully pursue new opportunities as well as strategic renewal, companies need to continually stimulate employees to think and act in entrepreneurial ways, a concept referred to as entrepreneurial orientation (EO) (Dess and Lumpkin, 2005). Company-wide EO involves engaging in product-market innovation, undertaking somewhat risky ventures, and taking a more proactive stance than competitors regarding new opportunities (Covin and Slevin, 1991). However, transformation towards EO usually involves restructuring, reorganization, and downsizing, which can be stressful for the whole company since this is time- and resource-consuming.

Entrepreneurial employees are distinguished by their orientation towards achievement, perseverance, creativity, and resourcefulness and are thus defined as individuals who instigate renewal or innovation within an existing organization. Consequently, entrepreneurial employees could be a means to induce EO more effectively and efficiently within a company, if strategically positioned.

Literature Gap

Research in the field of CE has been mainly focused on leadership, implementation, and assessment of CE. Further, entrepreneurial employees may help companies to achieve EO efficiently and effectively if strategically positioned within a company. However, strategic positioning of entrepreneurial employees has rarely been studied in research focused on entrepreneurship.

Research Questions

Therefore, we want to contribute to the small but growing literature exploring the manifestation of EO within the firm by providing answer to the important question of how does strategic positioning of entrepreneurial employees affect EO within a company?

Methodology

A qualitative empirical research approach of an exploratory nature was employed to address the research question. The selection of such an approach is justified since there has been no sufficient integrative and systematic investigation of the impact of entrepreneurial employees on a company’s EO. To better understand the different effects of entrepreneurial employees, two settings were investigated: entrepreneurs in central organizational units and entrepreneurs in decentralized organizational units. Moreover, to gain a holistic understanding, the pro-entrepreneurial organizational architecture implemented by management was studied.

Empirical Material

For the multiple case study approach (Eisenhardt, 1989), 11 cases were considered.

Results

Many researchers have identified managers as key to fostering EO. However, successful transformation does not rest solely with management, instead requiring the whole organization to act in an entrepreneurial way. Therefore, I show that entrepreneurial employees are key to induce EO more effectively and efficiently within the company since they are described as being achievement-oriented and having perseverance, creativity, and resourcefulness. Moreover, I show that these characteristics are especially important in the last step to strategic renewal, where entrepreneurial employees explore new skills and quickly exploit new market opportunities (Floyd and Lane, 2000). Furthermore, I reveal that while pro-entrepreneurial organizational antecedents (Hornsby et al., 2013) are key, even more important is the effective positioning of entrepreneurial employees (Burgelman, 1983) to pursue either strategic renewal or radical venture opportunities.

Contribution to Scholarship

My first contribution extends the few existing studies on entrepreneurial employees and their effect on EO. This study shows that the ability to establish entrepreneurial behavior in a company does not depend solely on management but requires entrepreneurial employees effectively positioned in the company.

My second contribution reveals that the positioning of entrepreneurial employees in centralized organizational units contributes to the exploration and exploitation of new radical venture opportunities (Sharma and Chrisman, 1999). However, it contributes little towards transforming a company towards becoming an entrepreneurially oriented organization through strategic renewal.

My third contribution reveals that entrepreneurial employees in decentralized organizational units are less efficient than those in centralized units in regard to exploration and exploitation of new radical venture opportunities (Sharma and Chrisman, 1999), but they have a greater impact on the transformation of the core organization to become more entrepreneurial, thus enabling strategic renewal.

Contribution to Practice

First, it is important to understand that EO regarding the pursuit of new venture opportunities as well as strategic renewal cannot be solely established from the top-down through management but requires the involvement of the whole organization. Consequently, entrepreneurial employees can be a means to establish EO in a bottom-up manner. Second, the positioning of entrepreneurial employees is key, since different objectives are achieved depending on their positioning in either centralized or decentralized organizational units.

Fitness

This study takes a new approach to organisational innovation development. Instead of focusing on a centralized innovation department, I show that is some cases it is mor effective and efficient to take a decentralized approach.

Bibliography

Burgelman, R. A. (1983). 'A process model of internal corporate venturing in the diversified major firm'. Administrative science quarterly, 223-244.

Covin, J. G. & Slevin, D. P. (1991). 'A conceptual model of entrepreneurship as firm behavior'. Entrepreneurship Theory and Practice, 16, 7-26.

Dess, G. G. & Lumpkin, G. T. (2005). 'The role of entrepreneurial orientation in stimulating effective corporate entrepreneurship'. Academy of Management Perspectives, 19, 147-156.

Eisenhardt, K. M. (1989). 'Building Theories from Case Study Research'. The Academy of Management Review, 14, 532-550.

Floyd, S. W. & Lane, P. J. (2000). 'Strategizing throughout the Organization: Managing Role Conflict in Strategic Renewal'. The Academy of Management Review, 25, 154-177.

Hornsby, J. S., Kuratko, D. F., Holt, D. T. & Wales, W. J. (2013). 'Assessing a measurement of organizational preparedness for corporate entrepreneurship'. Journal of Product Innovation Management, 30, 937-955.

Sharma, P. & Chrisman, S. J. J. (1999). 'Toward a reconciliation of the definitional issues in the field of corporate entrepreneurship'. In Entrepreneurship: Springer, 11-27.



An analysis of the influence of organizational innovation on firms’ product innovativeness

Marek Vaculik1, Wim Vanhaverbeke2, Annika Lorenz3

1Hasselt University; 2NEOMA Business School, ESADE Business School; 3Utrecht University, Netherlands, The

Context

Literature shows that organizational innovation seems to be as important as technological innovation for firms’ performance. Moreover, many firms struggle to establish and manage the formal and informal organizational structures for successful product innovation. Nonetheless, evidence on this critical relationship between organizational and product innovation is limited.

Literature

Cooper, R.G. and Kleinschmidt, E.J. (1987). New Products: What Separates Winners from Losers? Journal of Product Innovation Management, 4(3), 169-184.

Cooper, R.G. and Kleinschmidt, E.J. (1995). Benchmarking the Firm’s Critical Success Factors in New Product Development. Journal of Product Innovation Management, 12(5), 374-391.

Damanpour, F. (1991). Organizational innovation: a meta-analysis of effects of determinants and moderators. Academy of Management Journal, 34(3), 555-590.

Damanpour, F. and Evan, W.M. (1984). Organizational Innovation and Performance: The problem of “Organizational Lag”. Administrative Science Quarterly, 29, 392-409.

Dougherty, D. (1992). A practice-centered model of organizational renewal through product innovation. Strategic Management Journal, 13, 77-92.

Sosa, M.E., and Mihm, J. (2008). Organization design for new product development. In Loch, Ch.H., and Kavadias, S. (Eds.) Handbook of new product development and management. Elsevier: Amsterdam.

Literature Gap

The present study expands current knowledge on the effect of organizational innovation on product innovation by differentiating among the types of product innovation and industries. This paper further combines open with organizational innovation literature and derives explanatory factors for innovation performance and makes an important contribution to both literature streams.

Research Questions

“Are a firm’s organizational innovation (particularly introduction of new internal procedures) and open innovation activities (measured by methods of organizing external relations) associated with their innovativeness (measured by product innovation)?”

Methodology

To test our assumptions about the relationship between organizational innovation, open innovation and product innovation empirically we analyzed firm-level data from the cross-sectional Community Innovation Survey 2008-2010 for 5,151 firms in Czech Republic. We ran several logit regression models to examine the relationships between the introduction of new or significantly improved goods and services and organizational innovations aimed at internal procedures and external relationships. Moreover, we also estimated interaction terms to infer how the effect of internal organizational innovations on product innovation depends on the magnitude of changes in methods of organizing external relations.

Empirical Material

The data for CIS2010 were gathered in 2011 by means of a voluntary postal survey relating to the period 2008-2010. The target population included all enterprises with ten or more employees and the survey was stratified by size and economic activity. The survey was sent to 6,229 enterprises, representing all Czech manufacturing and service firms. The sample was obtained from the Registry of Economic Units by means of stratified random sampling in particular industries. In total, 5,151 responses were received. The rate of useful answers was 83% and a non-response analysis revealed no systematic non-response bias.

Results

The results show that both organizational innovation in internal procedures, as well as the need to reach out to external partners, are important drivers for successful product innovation in the manufacturing and service industries. Moreover, these organizational changes are positively associated with both incremental and radical product innovations.

Contribution to Scholarship

The findings highlight that changes to both internal processes such as business practices and new methods of organizing work responsibilities and new methods of organizing external relations are significant predictors of product innovativeness if implemented separately, and that if a firm implemented both at the same time the probability of introducing a new product onto the market was even higher. The results indicate one interesting difference. When companies introduced a radically new product onto the market then changing its external relations was of almost no relevance compared to incrementally new products.

Contribution to Practice

The firm has to continuously search for changes in its working procedures and business practices to fit market demands and make commercially viable products. Second, changes in organizational arrangements of a firm should correspond with the needs in the product innovation domain. Or vice versa, if a firm has many external relationships with a continuous inflow of new ideas, but its internal procedures are not adapted, then product innovation will be suboptimal. Organizational innovations should be thoroughly planned, implemented step-by-step, and evaluated continuously to avoid friction and stressful situations within the organizational structure.

Fitness

This paper combines organizational innovation with product innovation and open innovation literature. Moreover, it provides new insights on the importance of organizational innovation for successful product innovation by taking into account the innovation type and the industrial context of the firm.

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Stepping beyond organizational-innovation: a critical look into the non-technological innovation literature

Cristian Constantin

KU Leuven, Belgium

Context

Contradicting views on non-technological innovation and labelling of its underlying processes by respectable authors, corroborated with a narrow institutional perspective (e.g.Oslo_Manual) on the subject, have led to ambiguity and risk of derailed academic pursuit. Thus, the persuasion for additional direction in the ongoing devoted action at academic and regulatory level.

Literature

Hamel, G. (2007). The future of management. Boston, Mass: Harvard Business School Press.

Damanpour, F., Walker, R. M., & Avellaneda, C. N. (2009). Combinative Effects of Innovation Types and Organizational Performance: A Longitudinal Study of Service Organizations. Journal of Management Studies, 46(4), 650-675.

Kimberly, J. R., & Evanisko, M. J. (1981). Organizational Innovation: The influence of individual, organizational, and [...]. Academy of Management Journal, 24(4), 689-713.

Mol, M. J., & Birkinshaw, J. (2009). The sources of management innovation: When firms introduce new management practices. Journal of Business Research, 62(12), 1269-1280.

OECD. (2005). Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data (3rd ed.). OECD Publishing, Paris France.

P. J. DiMaggio, P.J. & Powell W. (1983). The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147-60.

Rachivadran, T. (2000). Redefining organizational innovation: toward theoretical advancements. The Journal of High Technology Management Research, 10(2), 243-274.

Literature Gap

With academic literature’s acknowledgement of a wider set of concepts in the area of non-technological innovation (e.g., administrative, ancillary, management etc.), the absence of clear measurement and assessment criteria hindered proper classifications and delimitations. The resulted ambiguity generated terminological entanglement, which risks disrupting rightful knowledge development.

Research Questions

1. What relationship can be established between “organizational innovation” and the core literature on non-technological innovation?

2. How organizational and marketing innovation relates to other “types of innovation” advanced in the non-technological innovation literature?

Methodology

In order to establish similarities and differences, the research aims to track the lineage of the development of the inquired concepts, inquiring into their background and current research trends by means of a (comparative) bibliometric analysis. The authors' referencing behaviour is captured by employing co-citation analysis and bibliographic coupling as main bibliometric techniques, revealing either the connexion to a core set of cited publications, or the association generated by the co-occurrence frequency of the references (Boyack&Klavans, 2010; Kovács et al., 2015). The "association strength" (Van Eck&Waltman, 2009) is used to create graphical representation of the concepts at cluster level.

Empirical Material

Identifying the scientific publications that make the object of the research is being done using Thomson Reuters' Web-of-Science (WoS) Core Collection database. The search is limited to journal articles published between 1955 and 2018, in English, which contain the name (and stylistic differentiation) of at least one of the non-technological innovation type the analysis is looking into in either the title, abstract or keywords (but not in “keywords plus”) fields of the database.

The cleaned dataset pertaining to the 17 non-technological innovation types analysed contains a total of 3909 articles, published between 1963 and 2018 (over 90% published after 1990), distributed unevenly across the terms. From the yearly distribution of the articles in the dataset, we observe that none of the terms is new (before 1970 all terms have been mentioned by at least one article), but only after 1991 there is a noticeable increase in the number of articles, mainly on organizational innovation, followed by management innovation.

For the scope of the research we further inquired into: i) how many other publications refer to the articles in the dataset and ii) by how many other publications the dataset articles are being referred.

Results

Generating individual profiles for each “type” of innovation will determine their conceptual/terminological and distinguishing features, while positioning this wide(ning) range of terms and concepts in relation to each other will lead to limiting confusions and setting a more clear stage for the subsequent research in the area of non-technological innovation.

The bibliometric maps for all concepts helps at:

1. Identifying the origins of non-technological innovation research and the main academic fields the concepts behind it are rooted into;

2. Pointing towards possible research avenues related to non-technological innovation based on a qualitative analysis (i.e. identifying the research areas subject to emerging interest in today literature);

3. Tracking the evolution of the concepts by means of their literature clusters to see how much have they diverged and to what fields they have migrated or extended to;

4. Analysing the bibliometric profile of the concepts against each other’s clusters to observe up to what extent there could be established any substantial links or hierarchical relationships (thus considering further inquiry into organizational innovation as “umbrella concept”);

5. Revealing the most influential articles in the area of non-technological innovation (as a whole and per clusters) and differentiating between "ceremonially" and "substantively" cited articles.

Contribution to Scholarship

The research contributes to the literature with an alternative perspective into the predominantly technologically-backed innovation theories, deepening the insights related to non-technological innovation and pointing towards a hierarchical relationship within this latter category.

From the academic literature perspective, this step is necessary given the rapid and far-reaching advancements made in the recent years in theorizing non-technological innovations, which resulted in generous contributions backed by imprecise taxonomies. The inquiry is even more necessary in a time when even review articles can be misleading, as they risk to either look into some concepts with conflicting meanings relatively to the original research perspective, or neglecting others with similar implications due to terminological differences.

Contribution to Practice

Shading additional light in the area of non-technological innovation proves its added-value in increasing efficiency and/or productivity by means other than the traditionally technology-related ones. Such an endeavour could contribute to the effort by academics and regulators to attain more clarity on knowledge management at organizational level and its conceptualization under or beyond the concept of “organizational-innovation”. Advancements in this direction would support the forthcoming update of the Oslo_Manual to include not only enhanced definitions and indications about the already mentioned types of innovations, but a clearer explanation on why other types of innovations have been or not included.

Fitness

Not only the conference has a track/theme(no.9) particularly suitable for the subject my research is advancing, but the emphasis of its 2019 edition on bridging sectors and communities lies at the heart of my research. For too long non-technological innovation has been understood differently by academics, businesses and regulators.

Bibliography

Selective bibliography

Anderson, J., & Markides, C. (2007). Strategic innovation at the base of the pyramid. MIT Sloan Management Review, 49(1), 83-88.

Autio, E., Kenney, M., Mustard, P., Siegel, D., & Wright, M. (2014). Entrepreneurial innovation: The importance of context. Research Policy, 43(7), 1097–1108.

Birkinshaw, J., Mol, M. J., & Hamel, G. (2005). Management Innovation. Academy of Management Review, 33(4), 825-845.

Birkinshaw, J., & Mol, M. (2006). How management innovation happens. MIT Sloan Management Review, 47(4), 81-88.

Carassus, D., Favoreu, C., & Gardey, D. (2014). Factors that Determine or Influence Managerial Innovation in Public Contexts: The Case of Local Performance Management. Public Organization Review, 4(2), 245-266.

Černea, M., Jaklič, M., & Škerlavajb, M. (2015). Management innovation enters the game: Re-considering the link between technological innovation and financial performance. Innovation: Management, Policy & Practice, 17(4), 429–449.

Crossan, M.M., & Apaydin, M. (2010). A multi-dimensional framework of organizational innovation: A systematic review of the literature. Journal of Management Studies, 47(6), 1154–1191.

Damanpour, F. (1987). The adoption of technological, administrative, and ancillary innovations: impact of organizational factors. Journal of Management, 13(4), 675-688.

Damanpour, F., Walker, R. M., & Avellaneda, C. N. (2009). Combinative Effects of Innovation Types and Organizational Performance: A Longitudinal Study of Service Organizations. Journal of Management Studies, 46(4), 650-675.

Hamel, G. (2006). The why, what and how of management innovation. Harvard Business Review, 84(2),

72-84.

Hamel, G. (2007). The future of management. Boston, Mass: Harvard Business School Press.

Huse, M., Neubaul, D., & Gabrielsson, J. (2005). Corporate Innovation and Competitive Environment. International Entrepreneurship and Management Journal, 1(3), 313-333.

Kimberly, J. R. (1981). Managerial innovation. In P. C. Nystrom & W. H. Starbuck (Eds.), Handbook of organizational design (pp. 84-104). New York, NY: Oxford University Press.

Kimberly, J. R., & Evanisko, M. J. (1981). Organizational Innovation: The influence of individual, organizational, and contextual factors on hospital adoption of technological and administrative innovations. Academy of Management Journal, 24(4), 689-713.

Kraus, S., Pohjola, M., & Koponen, A. (2012). Innovation in family firms: an empirical analysis linking organizational and managerial innovation to corporate success. Review of Managerial Science, 6(3), 265–286.

Mol, M. J., & Birkinshaw, J. (2009). The sources of management innovation: When firms introduce new management practices. Journal of Business Research, 62(12), 1269-1280.

OECD. (1992). Guidelines for Collecting and Interpreting Technological Innovation Data (Oslo Manual). OECD Publishing, Paris France.

OECD. (2005). Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data (3rd ed.). OECD Publishing, Paris France.

Rachivadran, T. (2000). Redefining organizational innovation: toward theoretical advancements. The Journal of High Technology Management Research, 10(2), 243-274.

Sawhney, M., Wolcott, R.C., & Arroniz, I. (2006). The 12 different ways for companies to innovate. MIT Sloan Management Review, 47(3), 75-81.

Schumpeter, J.A. (1934). The Theory of Economic Development. An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Cambridge, Mass: Harvard Business School Press.

Teece, D. J. (1980). The Diffusion of an Administrative Innovation. Management Science, 26(5), 464-470.

van Eck, N.J., Waltman, L., van den Berg, J., & Kaymak, U. (2006). Visualizing the computational intelligence field. IEEE Computational Intelligence Magazine, 1(4), 6–10.

van Eck, N.J., & Waltman, L. (2007). VOS: A new method for visualizing similarities between objects. In: Lenz H-J, Decker R, editors. Advances in data analysis: Proceedings of the 30th annual conference of the German Classification Society. Heidelberg: Springer.

van Eck, N.J., & Waltman, L. (2009). How to normalize cooccurrence data? An analysis of some well-known similarity measures. Journal of the American Society for Information Science and Technology, 60(8), 1635-1651.

van Eck, N.J., & Waltman, L. (2010). Software survey: VOSviewer, a computer program for bibliometric mapping. Scientometrics, 84(2), 523–538.

van Eck, N.J., & Waltman, L. (2017). Citation-based clustering of publications using CitNetExplorer and VOSviewer. Scientometrics, 111(2), 1053-1070.

Waltman, L., Van Eck, N.J., & Noyons, E.C.M. (2010). A unified approach to mapping and clustering of bibliometric networks. Journal of Informetrics, 4(4), 629-635.

Waltman, L., & van Eck, N.J. (2012). A new methodology for constructing a publication-level classification system of science. Journal of the American Society for Information Science and Technology, 63(12), 2378-2392.



Employee rewards structures and new venture innovation

Sarah Park, Michael Koch

Kent Business School, University of Kent, United Kingdom

Context

Employees are the most critical resources for any organization (Aldrich & Ruef, 2006) and most new ventures face issues of attracting, motivating and retaining employees. Innovation is inherently risky (Ahuja, Lampert, and Tandon, 2008), but is critical for the success of the new venture (Li & Atuahene-Gima, 2001).

Literature

New ventures seek to attract and retain certain types of employees who are able to cope with the various challenges including creativity, innovation, a willingness to take risks, cooperation, interactive behavior, and tolerance for ambiguity (Balkin & Logan, 1988). Rewards are supposed to affect different kinds of motivation, namely extrinsic and intrinsic motivation. Extrinsic motivation refers to doing something because it leads to a separable outcome (Guzzo 1979; Ryan & Deci, 2000). Rewards that deal with extrinsic motivation have an instrumental value for the individual. Intrinsic motivation refers to doing something because it is inherently interesting or enjoyable (Ryan & Deci, 2000). Intrinsically motivated activities are those for which the reward is in the activity itself or those that provide satisfaction of innate psychological needs, such as needs for competence, autonomy, and relatedness (Ryan & Deci, 2000).

Literature Gap

There is a shortage of research regarding HR practices that impact performance in new ventures (Chandler & McEvoy, 2000; Carlson et al., 2006). Regarding rewards, most research has focused on descriptive studies of monetary rewards rather than providing evidence for the effectiveness of different rewards elements (Cardon & Stevens, 2004).

Research Questions

This paper investigates the effect of non-monetary and monetary rewards on innovation in new ventures.

H1: The prevalence of non-monetary rewards in new ventures is positively related to the innovativeness of new ventures.

H2: The prevalence of variable incentive compensation is positively related to the innovativeness of new ventures.

Methodology

We test our hypotheses using regression analysis.

Empirical Material

We collected data by sending a mail survey to new private technology ventures in France. The source for this set of new ventures and their mailing addresses was Orbis. A list of technology ventures which are younger than eight years and private were obtained from Orbis. The survey was directed to the HR manager of each new venture. The four-page survey requested information on HR policies and practices and firm characteristics.

Results

We find that the non-monetary rewards are positively related to the overall innovation of the new venture. We further find that the non-monetary rewards are positively related to each form of innovation, i.e., product innovation, process innovation and organizational innovation. However, we find that the relationship between variable incentive compensation and the different forms of innovation of the new venture is not significant

Contribution to Scholarship

The results of this study contribute to a better understanding of the effectiveness of human resource management practices in the context of new ventures. Specifically, this study develops and tests theory on the relationship between different rewards elements and new venture innovation.

Contribution to Practice

The results imply that new ventures which focus on providing non-monetary rewards such as career development opportunities, regular performance appraisals, or work-life balance are more likely to achieve higher levels of innovativeness compared to new ventures which focus on incentive compensation such as cash bonuses or stock-based compensation.

Fitness

By examining new venture innovation in relation to rewards, this study makes a relevant contribution to the drivers underlying innovation, fitting into the overall conference theme “The innovation challenge: Bridging research, industry and society”. It is of particular relevance for the conference track Theme 9.

Bibliography

Ahuja, G., Lampert, C. M., & Tandon, V. (2008). 1 moving beyond Schumpeter: management research on the determinants of technological innovation. Academy of Management annals, 2(1), 1-98.

Aldrich, H. E., & Ruef, M. (2006). The evolutionary approach. Organizations Evolving, 2nd ed., Sage Publications, Thousand Oaks, CA, 16-33.Balkin, D. B., & Logan, J. W. (1988). Reward policies that support entrepreneurship. Compensation and benefits review, 20(1), 18–25.

Cardon, M. S., & Stevens, C. E. (2004). Managing human resources in small organizations: what do we know? Human resource management review, 14(3), 295–323.

Carlson, D. S., Upton, N., & Seaman, S. (2006). The impact of human resource practices and compensation design on performance: An analysis of family-owned SMEs. Journal of Small Business Management, 44(4), 531–543.

Chandler, G. N., & McEvoy, G. M. (2000). Human resource management, TQM, and firm performance in small and medium-size enterprises. Entrepreneurship Theory and Practice, 25(1), 43–58.

Guzzo, R.A. (1979). Types of rewards, cognitions, and work motivation. Academy of Management Review, 4(1), 75–85.

Li, H., & Atuahene-Gima, K. (2001). Product innovation strategy and the performance of new technology ventures in China. Academy of management Journal, 44(6), 1123-1134.

Ryan, R. M., & Deci, E. L. (2000). Intrinsic and extrinsic motivations: Classic definitions and new directions. Contemporary educational psychology, 25(1), 54–67.



 
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