organisational culture and its influence on innovation

7/29/2019 Organisational Culture and its Influence on Innovation

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The dynamic environment of the global market place demands that the firm increases itsinnovation capacity in order to remain competitive. In order to achieve this goal the firmmust eliminate the barriers preventing innovation by implementing policies that foster aculture of innovation, create an environment in which innovation can flourish and provideformal mechanisms which facilitate the innovation process

1.1. Objectives

The objective of the study was to identify the elements of organisational culture andevaluate each of the with the intention of identifying key factors required to increaseinnovation output.

2. Literature review2.1. Innovation

Innovation involves the introduction of beneficial changes to an organisation. These

changes originate from ideas derived either by individuals or by groups which areimplemented if a perceived value exists. A more comprehensive definition is 'theintentional introduction and application within a job, work team or organisation of ideas,processes, products or procedures which are new to that job, work team or organisationand which are designed to benefit the job, the work team or the organisation" (West &Farr, 1990).

West (2002, p. 355) describes innovation as a distinct two-step process. The first stepentails the development of ideas and is titled the creativity phase whilst the second stagetitled implementation involves the introduction of new and improved products, servicesand ways of doing things at work. The above definitions highlight two importantcharacteristics of innovation, the idea must be new and the resultant changes must resultin benefits. The novelty of an innovation is dependent on the environment which itinfluences as well as the relativity of the point at which it is measured. The secondcharacteristic of innovation, benefit, implies that the changes resulting from innovationresult in increased value or as stated by Escalfoni et al. (2010, p.1149) "Innovation can beconsidered a process in which the results occur when the ideas find businessopportunities". Thus, innovation is a result of a planned effort to derive value. The valuederived from innovation efforts could be related to financial benefits but could alsoencompass a number of other factors expressed by West (2002, p. 357) such as personalgrowth, enhanced satisfaction, improved group cohesiveness, better organisationalcommunication as well as productivity.

2.2. Importance of innovationThe importance of innovation to the success of any firm is widely documented ininnovation literature. Skerlavajn et al.( 2010, p. 6932) reference Mansury & Love (2008)who are of the opinion that innovative firms will grow faster, be more efficient and moreprofitable than non-innovators as well as Hurley & Hult (1998) who believe that innovationis among the most important factors impacting business performance. Further, the authorscite Banbury & Mitchell (1995) and Deshpande et al. (1993) who view innovation asessential to the survival and long term success of an organisation, since innovationprovides firms flexibility and enables them to effectively respond to customer needs.Crossan & Apaydin (2010, p. 1154) quote management scholars Mone et al.(1998) whohave observed that innovation is the most important determinant of firm performance.


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2.3. Organisational culture

The term culture is not easy to define and is used to describe a variety of situations.Kerlavaj et al (2010, p. 6391) provides a detailed analysis of literature to highlight thecomplexities associated with defining the term culture and highlights this complexity byciting Rollinson & Broadfield (2002) who state that there is no universally accepteddefinition, as well as Ott (1989) who identified over 70 different words or phrases used todefine organisational culture.

Weiner (1988, P. 534) found that most researchers of organisational culture agree thatshared values are a key element in the definition of culture". Charles et al. (2001) definesorganisational culture as "The specific collection of values and norms that are shared bypeople and groups in an organisation that controls the way they interact with each otherand with stakeholders outside the organisation." This definition is comprehensive as itencompasses values as well as interpersonal interaction.

However, the most understandable definition which best illustrates the concept oforganisational culture is provided by Deal & Kennedy (1982, p. 90) who defineorganisational culture as the way things get done around here".

2.4. Innovation supportive culture

According to Dombrowski, et al. (2007, p. 190) organisational culture has been found tobe one of the most important characteristics of sustained organisational innovativeness.Whilst creativity can be considered an individual process, innovation cannot as it involvesseveral people. From the definitions of organisational culture described in section 2.3,organisations have values, principles, norms and unwritten rules which impactcollaboration and behaviours which consequently impact the innovation process(Escalfoni, Braganholo, & Borges, 2010, p. 1149). Khazanchi, et al. (2007, p.873) remarksthat "Increasingly, studies stress organisational culture as a key to managing innovation".

Claver, et al. (1998) observe that innovation is strongly dependent on the "disposition ofindividuals and their organisational behaviour". The authors refer to Hunter (1992, p.251)according to whom innovation in corporations is linked to the aims of the organisation andis a means through which "the corporation and individuals may express their ideology".

Further, research conducted by Dombrowski, et al. (2007, p. 200) found that organisationswhich had a weakness with regard to their innovation cultures had poor innovationprojects and were unable to effectively execute their innovation strategies.

2.5. Innovation culture modelsResearchers have developed a number of models in order to describe the factors whichdrive an innovation supportive culture. Table 2-1 provides a summary of the modelsdeveloped by Dobni, Martins & Terblanche, Dombrowski, et al., Claver et al. and Malik &

Wilson.

Table 2-1: Summary of Innovation Culture Models

Citation Factor Description

(Dobni, 2008)

Intention to be Innovative

The intention of senior management to drive innovation

within the organization

Support Infrastructure The infrastructure to support innovation thrusts

Environment Supporting

Implementation An environment or context to support implementation

Knowledge

influence, or the knowledge and orientation of employees to

support thoughts and actions necessary for innovation(Martins & Strategy Vision, Mission, Purposefulness


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Terblanche,

2003) Support

Reward (recognition), Available Resources (time, IT, creative

people)

Structure

Flexibility, Freedom (Autonomy, Empowerment, Decision

Making), Cooperative teams (group Interactions)

Behaviour encouraging

innovation

Mistake handling, Idea Generation, continuous learning

culture, risk taking, competitiveness, support for change,

conflict handling

Communication Open Communication between members of the organization

(Dombrowski,

et al., 2007)

Innovative mission and

vision statements Single organizational goal

Leadership

Successful innovations need champions who can manage

innovation from ideas to successful commercialization

Safe spaces Teams or units with resources and facilitation

Boundary spanning Collaboration across various organizational boundaries

Incentives

No spot bonuses, every employee has innovative

responsibility

Flexibility

Open-mindedness and questioning of protocol and

proceduresDemocratic

communication Participation by all employees

Collaboration Communication and joint problem-solving

(Claver, et al.

, 1998)

Experimentation The corporation has a compromise with experimentation

Accept Failure Failures are viewed as part of the innovation process

Tolerance for Risk

Organization accepts the risks associated with the innovation

process

(Malik &

Wilson, 1995)Formalization

Appropriate procedures are available to help them deal with

task-related problems

Centralization/Participation Participation in Decision Making

3. Proposed modelThe process of extracting the factors of an innovation supportive culture and groupingthem into themes results in the model graphically illustrated Figure 3-1. A more detailedexplanation of each of these factors is presented in Table 3-1.


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Figure 3-1 Graphical model Illustrating the factors impacting an innovation supportiveculture

Table 3-1 Defining of Factors

Factor InterpretationIntention to beinnovative

An organisational wide initiative by all levels of management to driveinnovation resulting in all levels of employees understanding the firmsinnovation strategy.

SupportInfrastructure

Formalised procedures and tools coupled with appropriately skilledresources to incubate ideas and implement changes resulting frominnovation initiatives.

Learning Development of internal knowledge capacity.

Structure Organisational structures which empower individuals and enable them tomake independent decisions.

Behaviour Organisational acceptance that there are risks associated with theinnovation process and that failures will occur. Willingness to rapidly

prototype new ideas in order to validate potential benefits.Communication Established organisational wide communication channels where employeesare free to share opinions and ideas.

The six factor model described above has been developed based on the findings of fiveauthors namely Dobni (2008), Martins & Terblanche (2003), Dombrowski, et al. (2007),Claver, et al. (1998) as well as Malik & Wilson (1995). The conceptual model developed inthis research incorporates all elements derived by Martins & Terblanche (2003) in theirfive factor model. Crucially, the model developed by Martins & Terblanche (2003) hasbeen derived in the South African context which further supports the use of thisconceptual model as this is the country where the sample population shall be evaluated.

This model has been utilised to evaluate the sample population in order to determine theextent of an innovation supportive culture.


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4. Research methodologyExisting literature has been utilised to define innovation and culture as well as to highlightthe importance of innovation to an organisation. The existing literature has also been usedto identify the linkages between culture and innovation and identify the elements of aninnovation supportive culture.

The framework indicated in Figure 3-1 has been developed with the intent of evaluatingthe innovation culture of an organisation. In order to assess the framework ameasurement instrument was developed. Existing, validated measurement instrumentswere utilised as a basis for the research instrument. The modification to existing researchinstruments was limited to the changing of terminology in order to ensure relevance to thesample population.

The data obtained from the survey was evaluated and interpreted in order to identifywhich elements of innovation culture needed to be improved.

5. Results5.1. Analysis of results

The survey evaluated of each of the six factors, the results of which are presented in thefollowing paragraphs. The perception of employees towards the organisation's "Intentionto be Innovative" was evaluated through 5 statements. Only one statement was not metwith a positive response i.e. "I am sufficiently engaged in the strategic planning process".This response provides a clear path to improve this area of culture. Of particular interest isthe statement "Innovation is a core value in this organisation". The firm does not have aspecific value titled innovation however, one of its 6 values is "Continuous Improvement"which is directly related to innovation. Further, the company's vision and mission

statements makes particular reference to innovation. Given, these efforts by themanagement of the firm to drive innovation the 31% of respondents who did not show apositive response to the statement is alarming and highlights a disconnect betweenmanagement initiative and ordinary employees. The overwhelmingly positive response tothe statement "I want to be more innovative" highlights the desire of 91% of respondingemployees to be more innovative and support innovation thrusts.

The second factor evaluated was that of support infrastructure. This factor received agenerally poor response from employees highlighting that this factor was one in need ofsignificant improvement. In particular, the majority of employees pointed out that theorganisation lacked a method to effectively measure innovation initiatives. Further, theexistence of suitable information systems, resources and policies in support of innovation

all received responses which indicate that the majority of employees are not satisfied withthe current state of these facilities. Whilst the response to the statement "My supervisorhelps break down barriers that stand in the way of implementing innovation" did receive apositive response when compared to the other statements in this category only 49% ofrespondents agreed with the statement. Thus, in contrast to the response related tointention, the organisation's implementation efforts are not viewed as positively by itsemployees.

The factor titled Learning received the most positive response of all the six factorsevaluated. Clearly, this is an area which the organisation has managed successfully andrequires little improvement. With regard to individual willingness to learn in support of theorganisation's innovation initiatives, 89% of respondents were in support of this argument,

emphasising that a strong learning culture exists within the organisation.


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The positive nature of the average response relating to the organisatons structure wasdriven by the response to the question "I feel that I am trusted to act in the organisation'sbest interests with minimal supervision". 74% of responding employees agreed with thestatement which suggests that employees currently work in scenarios with littlesupervision. However, positive responses to the other two questions were less than 55%.Thus, whilst employees are provided independence in their work environments they areexposed to a degree of inflexibility and bureaucracy. The reduction of "red tape" is ameans by which this factor can be improved. Further, 95% of employees were in supportof empowerment and decision making responsibilities, thus creating an environmentsuitable for reducing bureaucracy.

The portion of the survey dedicated to evaluating the behaviour of individuals with regardto innovation received a poor response. Roughly one third of employees were of theopinion that innovation is perceived as too risky and is avoided. There was a similarsentiment towards the statement that individuals are unfairly penalised for new ideas thatdo not work.

The results for the communication theme, indicated a significant variation in the responseto the statements posed. The poorest response related to collaboration within andbetween departments with 32% of employees stating that current efforts were ineffective.Only 50 % of employees felt comfortable to challenge decisions and actions indicating aperceived fear towards management. The survey also highlighted that employees areneither consistently involved in decision making activities nor involved in evaluating theperformance of the organisation. Alarmingly, 21% of employees felt that they are neverinvolved in decisions on adoption of new rules, policies and procedures and 18% ofemployees stated that they never participate in evaluations of the organisation'seffectiveness. On the positive side more than two-thirds of employees found that theirsupervisors enabled them to participate in the decision making process. Further, themajority of employees were of the opinion that communications are open and honest and

that there exists trust and respect between management and employees.

5.2. Findings related to research questions

The analysis of responses as per the research questions are presented below:

"Are employees resistant to change?"The question could be directly answered from survey results based on theresponses to the statement "I desire changes if they bring benefits to the organisation."Ninety-five percent of employees provided a positive response indicating a nearlyunanimous willingness of employees to change.

"Are firm innovation values demonstrated by employees?"

The firm under analysis has 6 well publicised values; one of these is related toinnovation. The analysis of the results of the theme related to behaviour, indicates thatemployees are not satisfied with the present situation, resulting in this factor receivingthe second lowest score. Thus, having innovation as a core firm value does notguarantee that employee behaviour will shift to one supportive of innovation. Aninteresting nuance is that when posed the question "Innovation is a core value in thisorganisation"only 68% of respondents provided a positive response.

"What is the greatest barrier to an innovation supportive culture?"

Of the 6 factors evaluated support infrastructure which is defined as "Formalisedprocedures and tools coupled with appropriately skilled resources to incubate


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ideas and implement changes resulting from innovation initiatives", receivedthe poorest response.

"Do employees who want to be more innovative desire greater freedom in theirworking environment?"

The response to this question was developed by analysing the correlation of theresponses to the following survey statements: "I prefer working in an environmentwhere I am empowered to make decisions as I am willing to take on the additionalresponsibilities and "I want to be more innovative". The correlation coefficient wascalculated as 0.38 which indicates that a weak correlation does exist. "Do employees want to improve their skills?"The question can be directly answered from survey results based on the responsesto the statement "I want to learn and in the process gain more knowledge in order tosupport our organisation's innovation initiatives". Analysis of the response indicatesthat indicates that 90% of respondents demonstrated a willingness to learn.

"Do employees who want to improve skills, know what to learn in order to supportinnovation outcomes?"The response to this question was developed by analysing the correlation of theresponses to the following survey statements: I know what training/learning I need toengage myself in, to support innovation" and I want to learn and in the process gainmore knowledge in order to support our organisation's innovation initiatives". Thecorrelation coefficient was calculated as 0.17 which indicates that virtually nocorrelation exists. Thus, employees who desire to improve their skills do not knowhow to do so in a manner which supports innovation. "Do employees who want to be more innovative also want to gain more skills?"The response to this question was developed by analysing the correlation of theresponses to the following survey statements: "I want to be more innovative" and "Iwant to learn and in the process gain more knowledge in order to support ourorganisation's innovation initiatives". The correlation coefficient was calculated as0.28 which indicates that a weak correlation does exist. Thus, this research questioncannot be confidently answered.

6. Conclusions and recommendationsThis research study was aimed at assessing the influence of organisational culture oninnovation at the engineering division of a South African petrochemical company with theoutcome being a framework to evaluate the innovation culture and identification of key

focus areas within the firm.The synthesis of prior research into innovative supportive cultures revealed 6 dominantthemes:

Intention to be innovative: An organisational wide initiative by all levels ofmanagement to drive innovation resulting in all levels of employeesunderstanding the firms innovation strategy

Support Infrastructure: An organisational wide initiative by all levels ofmanagement to drive innovation resulting in all levels of employees understandingthe firms innovation strategy


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Learning: Formalised procedures and tools coupled with appropriately skilledresources to incubate ideas and implement changes resulting from innovationinitiatives

Structure: Organisational structures which empower individuals and enable themto make independent decisions

Behaviour: Organisational acceptance that there are risks associated with theinnovation process and that failures will occur. Willingness to rapidly prototype newideas in order to validate potential benefits

Communication: Established organisational wide communication channels whereemployees are free to share opinions and ideas

Research questions posed were answered through the analysis of data gathered by way

of a survey of approximately 600 employees of the firms engineering division whichyielded 97 useable responses. The outcome of the analysis provided the following mainconclusions:

Of the six factors evaluated, support infrastructure and behaviour were identifiedas the greatest barriers to an innovative supportive culture whilst,learning and intention to be innovative received the most positive response

The majority of employees were enthusiastic about improving their skills in order tosupport the firms innovation aspirations. Further, employees were willing to acceptorganisational changes if they resulted in benefits to the organisation.

A weak correlation i.e. correlation coefficient of 0.38 and 0.28 was identifiedbetween employees who had the desire to be more innovative and those whodesired increased freedom in their working environment as well as those whowanted to gain more skills. Virtually no correlation existed (correlation coefficient of0.17) between employees who had the desire to improve their skill set and thosewho knew which skills were important to supporting the firms innovationobjectives.

This research has identified two primary focus areas for the firm to improve its innovationoutput namely, support infrastructure and behaviour. Whilst the theme related to learningdid receive an overwhelmingly positive response from employees, they were unsure whatskills would benefit the organisations innovation objectives. Thus, the learning outcomes

of the organisation must be modified in order to highlight the required skills to employees.In addition the research inadvertently identified other interesting insights:

Cross functional collaboration was highlighted as major deficiency within theorganisation. Given the vast wealth of talent within the organisation, improvinginternal communication mechanism is essential in ensuring the maximum usage ofthe firms human capital

Approximately one-third of employees did not identify with the firms innovationvalues even though it is publicised as one of its core values. This highlights a riftbetween the publicised image of the firm and the values which employees actuallyassociate with.


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Although the research study is performed within the narrow spectrum of a single firm, theoutcome may be broadened and customisable to other engineering firms due to thediverse group of engineers surveyed.

References

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organisational culture and its influence on innovation

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