By Tae-Yeol Kim, Xing Wang, Sebastian Schuh, and Zhiqiang Liu

Innovation is crucial to organisations’ long-term success, but it’s also challenging, risky and exhausting to achieve it consistently. It’s broadly understood that encouraging employees’ innovative behaviours relies, to some extent, on an organisational climate of innovation – i.e.: there should be a shared perception among employees that the organisation supports them working on innovative ideas and projects. However, just how much this climate prompts these behaviours is still an under-researched area.

Research increasingly points to managers as important ‘linking pins’ that can effectively transmit the organisation’s general thinking and specific strategy when it comes to innovation and how employees are expected to pursue it. This potentially makes managers a crucial conduit for creating an organisational climate for innovation through their proactive goal regulation – i.e.: how managers envision future states or outcomes for the organisation related to innovation, plan pathways to achieve those goals, and then mobilise employees to attain said goals while monitoring the situation.

After surveying almost 100 organisations and over 1,100 employees and 269 working group managers, we found that:

• Organisational innovative climate is significantly and indirectly related to employees’ innovative behaviours via managers’ proactive goal regulation.
• However, this link is only significant in organisations that operate in an environment with intense competition.

Our results find that managers are indeed vital links between the organisation and its employees when trying to build a workplace climate of innovation. Their actions, specifically their ability to proactively set goals and maintain an emphasis on innovation, are influential in transmitting and shaping this climate by articulating what is coming down from the very top of the organisation.

When the organisation in question operates within a highly competitive environment, this link is strengthened. Competitive intensity – the extent to which a company faces pressure and rivalry from other companies in its market – creates a sense of urgency that guides managers’ attention toward practices and procedures related to innovation, causing them to be more proactive in their goal regulation.

For organisations looking to innovate more broadly or effectively, these findings present some interesting considerations. Clearly, it’s essential to have a well-developed top-down strategy on how to create a climate of innovation across the organisation. Equally, it’s essential to have managers understand and buy into this strategy, so they can transmit it to the employees, shape the message for more targeted results, and generally monitor its efficacy in encouraging innovation overall.

However, the moderating factor of competitive intensity throws out a fascinating yet potentially worrying consideration – managers may not always act in line with the organisation’s climate, depending on the environment in which they operate. If managers were invariably committed to realising the organisation's goal of building an innovative climate, then the link between their proactive goal regulation and employees’ innovative behaviours should be strong in all cases, but that’s not what our results indicate. When competition intensity was high, the link was stronger, but for organisations that weren’t experiencing fierce rivalries or strong overall pressure from market competitors, the link was weaker.

This strengthens the argument that external threats, such as competition and rivalry between organisations, can be important galvanising factors in encouraging organisational members (employees, but particularly managers) to embrace the overall goals and specific messages being sent down from above.

Increasingly, this contextual factor of business environmental pressure and competition intensity is coming to affect more organisations (and organisational types) as emerging technologies continue to disrupt even the most stable of markets and industries. However, organisations at the top of their game, with few or even no clear rivals, can expect greater difficulty in inculcating a climate of innovation. Their managers may not feel the necessary pressure to encourage the invariably difficult business of changing things up when they, and their teams, can simply stick to what is already working.

This article refers to a study entitled: “Effects of organisational innovative climate within organisations: The roles of Managers’ proactive goal regulation and external environments” by Tae-Yeol Kim, Xing Wang, Sebastian Schuh, and Zhiqiang Liu published in the Journal of Research Policy.

Tae-Yeol Kim is Philips Chair and Professor of Management at CEIBS. Xing Wang is a Research Associate Professor at University of Illinois Chicago. Sebastian Schuh is Professor of Organisational Behaviour and Department Chair of Organisational Behaviour and Human Resource Management at CEIBS. Zhiqiang Liu is a Professor at Management School of Huazhong University of Science and Technology.