Managing Knowledge, Absorptive Capacity and Innovation

The following sections are included:

• About the Author
• Contents
• Introduction by Joe Tidd

The purpose of this paper is to investigate the effects of employees’ creative problem-solving on organisations’ innovation outcomes, as well as the effects of innovation outcomes on organisations non-financial performance. Based on a sample of 320 participants from diverse organisations, using structural equation modelling techniques, we find that creative problem-solving does not have any effect on innovation outcomes, except with the moderating influence of an innovative culture or communication. We also find that innovation outcomes have a positive relationship with non-financial performance. We make theoretical contributions into the antecedents of innovation outcomes, while offering several practical insights for leading creative employees and managing innovation.

Scholars suggest that only certain personality traits can easily adapt and react positively to organisational changes and consequently to innovative behaviour. Hence, in this study, we drew upon career construction theory to develop a hypothetical model examining how certain personality traits (i.e., curiosity, focus on opportunity, and resilience) are likely to influence career adaptability and consequently innovative behaviour. To test the model, we used two-wave longitudinal data focusing on 313 frontline employees operating in a random sample of five-star hotels in Dubai. Using Smart-PLS.3, we revealed that employees with a high level of curiosity, focus on opportunity, and resilience tend to increase the likelihood of their career adaptability significantly. In other words, employees with such work-related personality are more likely to adapt to organisational changes and fit different organisational environments. Furthermore, the result of the study found that career adaptability significantly mediated the relationship between these personality traits and innovative behaviour. The findings have significant implications for both theory and practice. They may also be contextual. These implications are discussed.

Organisational innovativeness is known to be affected by employee incentives and motivation, but the evidence is inconclusive regarding the organisational contexts and contingencies where this phenomenon takes place. To examine this issue, we adopt the Competing Value Framework of four types of organisational cultures, and hypothesise differences in the incentives–motivation–innovativeness relationships. Using an empirical study of 425 Finnish firms in technology industries, we found in general that intangible and tangible incentives facilitate both intrinsic and extrinsic motivation, but only intrinsic motivation leads to improved organisational innovativeness. Testing our model for subsamples that included clan, adhocracy, market, and hierarchy cultures, we found that results vary considerably between those. First, incentives have different implications to motivation under different organizational cultures. Further, intrinsic motivation leads to innovativeness under adhocracy, clan, and market culture, but not under hierarchy culture, and extrinsic motivation does not lead to innovativeness under any culture.

In this paper, we advance our understanding of the relationship between slack and innovation in two ways. We distinguish between different slack types on the organisational level, and hypothesise and empirically test how they influence innovative work behaviour (IWB) of both employees and top managers on the individual level. Applying a multigroup analysis in PLS-SEM, we test our model with a sample of 403 individuals, 155 top managers and 248 employees, from the German real estate industry. We find support for our central argument that the influence of organisational slack on individuals’ IWB differs according to the type of slack and the organisational role of the individual.

In this research, we examine the effect of workgroup interpersonal justice (WIJ) (defined as the extent to which employees are treated with dignity and respect by their co-workers) on innovative work behaviours (IWB). Specifically, we first test the mediating role of group identification (GI) in this relationship. Next, we examine the moderating role of reflexivity of the group on this mediation effect. Based on 204 employees, our results showed that the indirect effect of the WIJ on IWB, through GI, is moderated by the reflexivity of the group. Theoretical and practical implications are discussed.

This paper examines which management strategies public managers may use to enhance innovative behavior among their employees. We focus on the implementation of a politically ambitious innovation strategy in a large Danish municipality. Based on a survey distributed to 1292 employees and 113 managers, we conduct a multi-level analysis focusing on how different management strategies (reported by the managers) and perceived management behavior (reported by the employees) affect the public employees’ perceived idea generation, idea promotion, and idea realization. The results show that knowledge of the innovation strategy, encouraging management, a risk-tolerant culture and autonomy are important management tools, whereas strategic management communication and economic rewards do not correlate with any of the phases in innovative work behavior. We contribute with new evidence on how innovation is supported by public managers in the different phases of the innovation process, and we conclude by discussing the practical implications of the findings.

Healthcare workers’ innovative work behaviour plays a key role in generating innovation. To date determinants of innovative work behaviour are not completely detected and there is a call for additional empirical evidence on organizational-level factors influencing individual’s innovation.

This study empirically explores the relationships between organizational climate, organisation’s openness to innovation, and innovative work behaviour in the context of a public sector healthcare organization.

A survey has been conducted on employees of a large Italian public sector hospital. Data collected on 560 professionals have been analyzed through Structural Equation Modelling technique.

The results show that organisational climate affects employees’ innovative work behavior both directly and indirectly through organisation’s openness to innovation. Specifically our findings highlight that organization’s openness to innovation partially mediates the relationship between organizational climate and employees’ innovative work behavior.

The results should lead managers to consider the importance of organizational climate and openness to innovation as effective levers to pull in order to improve employees’ innovative work behavior.

This paper is the first to empirically investigate the connections between the Big Five personality factors, ambidextrous team leadership, organisational climate of US workers that supports innovation, and individual innovative work behaviour. A self-report survey was used to obtain data from 215 team members in US-based corporations. We provide an empirically tested model of the positive influence of Openness to Experiences, Extraversion and Conscientiousness personality traits on individual innovative work behaviour. Results also confirm that supervisors’ leadership behaviours and a supportive organisational climate of innovation have a moderating influence on this set of relationships. Individuals can develop their individual innovative work behaviour. Supervisors can adopt higher levels of opening behaviours and executives can create a climate supportive of innovation to boost individual innovative work behaviour. This study further demonstrates that Big Five personality traits interact with supervisor behaviours and a supportive climate to foster individual innovative work behaviour.

This paper contributes to the literature and management practice by opening the “black box” of firms’ absorptive capacity (AC) processes. Following a process research approach and based on in-depth comparative case studies of four German manufacturing companies, we develop and empirically validate a procss model of the firm-internal AC process. Our model integrates the different single elements (e.g., individuals, teams, departments) as well as the different linear and nonlinear causal interactions that constitute the firm’s ability to identify, adopt, implement and exploit external information and knowledge. Furthermore, the paper elaborates on various organizational leverages to increase the effectiveness of the identified process flows. The findings provide explanatory insight into the organisational prerequisites of AC. Thus, the paper simultaneously contributes to enhance the academic and management’s understanding of firms’ AC by identifying its constitutional key elements, their different kinds of processual interrelation as well as organisational prerequisites and points of leverage to modify, measure, and improve the AC of a company.

Managers employed in the dual gatekeeper-shepherd roles in open innovation contexts need to combine external knowledge inflows with existing internal knowledge to drive innovative work behaviour. This study explores how such managers leverage knowledge sources at the firm boundary, to drive innovation activities, by using their individual-level capabilities of absorptive capacity and ambidexterity. To collect data for the study, 121 technology managers employed in four large automotive equipment manufacturing firms in India were surveyed using an online questionnaire. Structural equation modelling (PLS-SEM) was used to examine the direct, moderation and mediation relationships hypothesised in the study. The results demonstrate the synergistic roles played by individual absorptive capacity and individual ambidexterity in enhancing the innovative behaviour of managers operating in an open innovation context. This study contributes to the theory related to the understudied individual-level analyses of open innovation and offers recommendations for managers looking to increase their innovativeness at work.

While investigating organisational factors related to a firm’s ability to innovate, this study identifies two new antecedents of absorptive capacity. Drawing from literatures on innovation management and organisational studies, the paper puts forward a model linking absorptive capacity to a unit’s cognitive diversity and cohesiveness, empirically testing their effects on potential absorptive capacity (PACAP) and realised absorptive capacity (RACAP). Statistical tests are conducted using original survey data collected in the healthcare industry. Future research and implications for practitioners are discussed.

Absorptive capacity (AC) describes new knowledge absorption and its use for innovation on an organisational level. In this paper, we explore the role of individual AC (IAC) for corporate innovation. We focus on the individual and relationships among the capability dimensions of existing AC models. A quantitative online survey allows us to empirically explore and underline the role of the individual in AC. Our findings contribute to and extend existing theories of AC, by confirming the multidimensionality of IAC, shed light on the view of transformation and exploitation as alternative paths and their effect on different innovation processes. Our research highlights the individual’s central role in innovation and introduces, explores and evaluates individual capacities to absorb new knowledge. This in consequence will influence processes and structures within a company with regard to innovation and human resource management.

Emerging markets have achieved important growth through innovation in services and industrial sectors. However, both research and empirical evidence about innovation development is very limited in Latin America. Innovation-based absorption capacity of different companies is one of the main keys to this growth. This empirical study analysed the relationships between absorption capacity and organisational performance (OP) in a sample of 227 firms in Medellin, Colombia. The findings show that enterprises developing the absorption capacity acquired (ACA) may have better probabilities to improve OP. This study argues that companies whose managers motivate their employees to use information within sources from their industry may have higher probabilities to improve organisational profit and growth.

Innovation and HRM practices are connected, but the nature of these linkages may not be completely understood. Practical examples where knowledge securing practices limit efficiency of creative work, and where rewarding established ways of work prevent new approaches from being tried, suggest that there are challenges. In this study, we examine the relationships between different forms of HRM practices, knowledge sharing and protection (i.e., knowledge activities), and performance outcomes. Our findings from empirical analysis among 150 firms suggest that HRM practices are positively related to subjective overall performance and innovation performance, and that knowledge sharing likewise has such a relationship with performance outcomes. Furthermore, when knowledge sharing is accompanied with HR practices targeted to securing knowledge, innovation performance can be improved. Knowledge securing also comes in play when it is combined with HR practices of personnel compensation and appraisal; in this case subjective performance is diminished. This leads us to suggest that companies might benefit from smart HRM systems.

The extant research findings have identified lacunas (i.e. gaps, unresolved issues, and black box) in the High-Performance Work System (HPWS)-Performance relationship and suggested usage of a mechanism (mediator) that can close up the identified lacunas. Thus, this study investigates whether employee creativity can play a mediating role in the relationship between HPWS and firm non-financial performance. The sample size of the study is 518, and respondents were selected through stratified sampling technique. Data were collected from the sampled 518 managers in Nigerian firms. Partial Least Squares (PLS) algorithm and bootstrapping techniques were used for data analysis. The result indicates that employee creativity competitively/partially mediates the relationship between HPWS and non-financial performance. Employee creativity represents an appropriate mechanism to explain the relationship between HPWS and non-financial performance. Hence, the positive indirect effect via the mediator variable (employee creativity) reveals the ‘true’ relationship between HPWS and non-financial performance. This result implies that HPWS may not necessarily enhance non-financial performance. Ill-configured HPWS could jeopardize non-financial performance, but HPWS that stimulates employee creativity would enhance non-financial performance. Lastly, the implications, limitations and suggestions for future research are discussed.

Integration of organisational units has been extensively researched in various streams of management and organization sciences. It is very important whenever knowledge differences have to be overcome due to functional departmentalisation and the ensuing knowledge specialisation. However, extant literature does not yet appreciate the mediating role of absorptive capacity (AC) in this context. We argue that departments use integration mechanisms in order to develop and maintain such an organisational capability to absorb knowledge from other departments, so that integration can succeed to increase innovation performance. Our unique dataset of Italian manufacturing firms from various industries allows us to study this in the context of the integration of research and development (R&D) and marketing and sales (M&S) departments. Thereby, we provide empirical evidence on the mediating role of AC. We find evidence that R&D departments build AC via formal cross-functional integration, while M&S departments do so through informal integration. Moreover, we provide evidence of AC’s mediating role for the relationship between cross-functional integration mechanisms and innovation performance. Our findings also reveal significant differences between R&D and M&S functions in terms of effect sizes and significance levels. AC of R&D departments has a significant and substantial effect on innovation performance and thus effectively acts as a mediating variable, while in case of M&S departments we observe a significant direct effect between formal cross-functional integration and innovation performance without any mediation by AC.

This paper aims to verify the relationships that may exist between knowledge absorptive capacity (ACAP), innovation performance, and organisational performance in Brazilian firms. A sample of 111 firms from Southern Brazil was surveyed and PLSSEM was used to test the theoretical hypotheses. The relevance of ACAP for innovation and organisational performance is supported. The research also shows that realised ACAP has more influence on innovation performance compared with potential ACAP. Some guidelines for furthering ACAP models suitable for developing countries are provided as well. The findings are a good reference for practitioners as they identify possible actions which can enhance ACAP and thereby contribute to improving innovativeness and performance. This research complements earlier studies which called for the exploration of the role of ACAP on innovation performance and firm’s competitiveness in developing countries, and it opens new avenues for multidisciplinary research.

Purpose: The aim of this research paper is to examine the relationships between intangible assets, employee’s performance, and job satisfaction (JS) with structural model. The research explores both the practical and theoretical basis of these paradigms on organisation performance. This research also aims to identify whether a relation can be established between these aspects in the context of non-profit organisation performance in Indonesia. Design/methodology/approach: Reviewing the literature explores a theoretical existence of related context preceding the organisational performance. The authors used structural equation modelling to check the research prototype with a sample of 121 respondents. The respondents were heads of departments and general employees. In addition, SPSS was used to measure demographic, non-response bias, and generate descriptive statistics. Findings: Overall, the results demonstrate that organisation with a higher level of intellectual capital (IC), employee performance (EP), and job performance (JP) are important predictors of organisational performance in this sample. Similarly, JS and IC predicted EP. It is acknowledged that emotional intelligence such as satisfaction and dissatisfaction are important incentives to necessitate action tendencies. Research limitations/implications: This research is focused on organisations. Further research may extend the focus to different types of organisations and countries. Practical implications: The findings of this study may help institutions and HR departments to initiate new strategies such as integrating the traditional company performance measurement systems based on various indicators of this study. These factors succeed in providing an effective representation of a set of intangible assets that are developed by the company and that contribute to the improvement of company’s performance. Additionally, to maximise IC assets, the company can implement knowledge sharing practices among employees and experts as well. Original value/knowledge contribution: This research is useful for organisations and academics as a reference of the comparative and intersecting explanation of enhancing organisational performance. Moreover, various main concepts/theories are combined, namely, IC, JS, and employee’s performance to solve the obstacles of organisation performance.