If you want to encourage your team to be innovative, you need to do more than give them a ping pong table or other fun perks common to Silicon Valley tech firms like Google and Facebook. Companies who want employees to be more innovative must create an environment that encourages proactivity, risk-taking and innovation, according to the results of a new study co-authored by CEIBS Professor of Management Tae-Yeol Kim.

The researchers surveyed 105 managers and 39 CEOs at small and relatively young entrepreneurial firms working in competitive markets in conditions that require employees to be highly innovative. Participants in the study were asked a series of questions that would allow the researchers to assess their workplace’s innovative, proactive, and risk-taking climates. Managers were also asked to respond to questions such as “Inventing new solutions to problems is an important part of who I am” on a scale of 1 (strongly disagree) to 5 (strongly agree) to assess their passion for inventing. The CEOs were asked to rate their employees on a scale of 1 to 5 on things such as “investigates and secures resources to implement new ideas”, to enable the researchers to assess their employees’ innovative behaviours.

The results show that when companies create a climate that is proactive, innovative, and encourages risk-taking, employees will indeed be more innovative and have the strongest passion for inventing. All three of the factors are necessary for this, just innovation on its own, or coupling it with just proactivity or risk-taking, will not be enough to stimulate innovation. The results of the study also show that besides creating the right environment, companies must give their employees opportunities to express and develop their individual passion for inventing if they want them to be more innovative. Though the study looked at small, young entrepreneurial firms, the researchers say that larger and more established firms can also learn from their results.

The study is titled “Interactive Effects of Multiple Organizational Climates on Employee Innovative Behaviour in Entrepreneurial Firms: A Cross-level Investigation” and has been published by the Journal of Business Venturing. Professor Kim’s co-authors are Jae Hyeung Kang of the Oakland University School of Business Administration, James G. Matusik of the Eli Broad College of Business at Michigan State University, and J. Mark Phillips of the Jack C. Massey College of Business at Belmont University.

Read the paper here.

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