Creating a Climate for Innovation - Case Study Example

? Creating a Climate for Innovation Executive summary The goal of every private or public organization is to enhance the performance and be able to deliver the desired level of output to its stakeholders. These organizations need to create an environment which favors new innovations for future prosperity. They should therefore be able to respond to challenges it faces and retain talented workers. In reviewing the basic creation of an innovation climate, we based our studies in three critical theories. These theories are; organizational integration from the stream of organizational design, the knowledge creating organization from the stream of collective cognition and learning, and a hybrid theory of team climate for innovation. All these theories concur that innovations in organizations occurs where collaborative work, common understanding of vision and norms, and shared learning among proximal groups are necessary conditions. The organizational theory relates the competitive advantage of the business enterprise to its structural strategy while the knowledge creating organizational theory involves activities of knowledge creation and discovery that takes place in the social context, where knowledge transfers require social interactions. Finally, the hybrid theory incorporates the concepts of both the organizational integration theory and the knowledge creating organizational theory. This theory assumes that innovation occurs within proximal work groups if particular conditions that are sufficient for their collective learning and shared understanding and coordinated performance occur. These theories fall short in describing all aspects which may influence an organizations ability to prosper in the future In order for the analysis of the innovation phenomenon in organizations to be made, a conceptual method was derived. The model was to be used in developing various hypotheses that would be verified through survey and other research methods. The three innovation theories were used to derive three constructs which would in turn lead to distinguished business performance. The three constructs are: “Leadership for Innovation” (LFI), “Organizational Culture for Innovation” (OCI), and “Team Climate for Innovation” (TCI). Although these same constructs were identified in the previous work of Panuwatwanich (2008). However, this constructs risk exposing the organization into losses because of their reliance on surveys. In event of a wrong survey, the implementation of construct methods may severely harm the organization. The factor analytic model was also used when the variables of theoretical interest cannot be easily identified in the organization, hence observable variables are used. The factor analysis uses two statistical approaches in the analysis, that is, exploratory factor analysis and confirmatory factor analysis. The exploratory approach focuses on grouping related variables together while the confirmatory approach focuses on analyzing data for inferential purposes and hypothetical testing. Though important, the factor analysis method is sometimes ineffective in the analysis of data which has no correlation. Finally, the preliminary findings also showed that, the climate of innovation in the UAE organizations is moderately strong, although it requires more practical support in terms of providing more resources for the skill base to further develop their skills and seek better ways of developing creative solutions. Another finding is that construction firms performed slightly better than non-construction firms in demonstrating an innovation-conducive atmosphere. This showed that the statistical methods used were accurate and reliable. Critical analysis of the conceptual model for innovation In order for a good climate for innovation to be created in a business environment, three main theories should be put into consideration. The theories include; the organizational integration theory from the broad stream of organizational design, the knowledge creating organization theory from the main stream of organizational cognition and a hybrid theory of team climate for innovation. Organization integration theory This theory relates the competitive advantage of the business enterprise to its structural strategy. It further suggests that that in order to sustain a competitive advantage, business enterprises that operate in the advanced economies have to achieve a higher degree of “organizational integration” (in terms of the social structure of the enterprise) over time (Churchill Jr 1979). Through comparison with other companies, the organizational integration hypothesis is able to analyze a company’s quickness and effectiveness in response to organizations integration of a skill base that can engage in collective and cumulative learning. The theory of ‘innovative firm’ also necessitates that the strategic decision makers should be able to mobilize committed finance to sustain investment in the skill base for an efficient performance (Fagerberg 2005). In general, theories of organizational design aim at identifying the structural characteristics of an innovative organization and its effect on product and process innovation. The knowledge creating organizational theory In this theory, activities of knowledge creation and discovery takes place in a social context where knowledge transfer requires social interaction, shared understanding and interaction with the corporate collective mind. In this regard, corporate mind is the accumulated knowledge of the organization stored in its rules, procedures, routines and shared norms used to guide the patterns of interaction and activities of generating and utilizing knowledge (Harty 2005). The hybrid theory This theory assumes that innovation occurs within proximal work groups if particular conditions that are sufficient for their collective learning and shared understanding and coordinated performance occur. From a social psychology point of view, hybrid theory combines factors from both organizational design and organizational cognition to create a climate for innovation. This model theory provides four factors essential for team innovation, namely: “vision”, “participative safety”, “task orientation”, and “support for innovation” (Byrne 2001). According to this model, for a team to be innovative, it must have a clearly defined and shared vision that transmits signals to stimulate the members’ energy towards the expectations of the organization for innovation. However, the above theories do not put into consideration the various factors that influence an organizations’ innovation. The theories do not consider the effect of government policies, the availability of resources, the organizations policy on innovation, the willingness of employees, and the current state of the organization’s profitability (Harrington 2008). These factors play an important role in determining the climate for innovation hence must be considered in the theories. The conceptual model In order to analyze the extent of the innovation phenomenon in organizations, a conceptual model was developed. The model was then used in developing hypothesis that attempted to verify through a quantitative study via survey development and response analysis (Lazonick and West 1998). Using the above stated theories, three constructs were created. They are said to lead to distinguished business performance of organizations as a direct result of innovation outcomes. 1. Leadership for Innovation (LFI): was created from the theory of organization integration. It refers to the standpoint of the supervisor of the team towards encouraging and acknowledging creativity and engaging his team in learning activities as well as in decision making. 2. Organizational Culture for Innovation (OCI): was proposed based on the theory knowledge creating organizations. It refers to the collective corporate mind and memory in terms of shared perception regarding practices, policies, and norms of the firm. It also refers to the efforts the firm puts in encouraging and stimulating creativity and other ingredients of innovation (such as resources, skills, and knowledge). 3. Team Climate for Innovation (TCI): was proposed on its own since it is a well-developed component with a measurement tool. It refers to a shared perception among proximal work groups regarding shared vision, perception of participative safety, support for innovation and the quality of task performance. Though important, the conceptual knowledge can lead to implementation of improper ideas. This is because, the methods of quantitative study through survey, if not properly carried out, may give the organization a wrong innovative strategy (Guadagnoli 1988). In addition, the three constructs focus more on an organizational perception and not the society as a whole. Factor analysis Factor analytic model is used when the variables of theoretical interest cannot be easily identified in an organization, prompting the observed variables to be used to measure the effect of the latent variables (Meyer 2000). It is based on studying the correlation among variables; that is, to find out if two or more variables have some features in common and finding the magnitude and direction of these relationships. In the study, two statistical approaches of factor analysis are used, that is; exploratory and confirmatory. Exploratory factor analysis This approach focuses on grouping and relating variables into factors. In order to use this approach, we need to test the factorability of data in terms of sampling and inter-correlation between factors (Pohlmann, 1988). Confirmatory factor analysis This approach analyses data for inferential purposes and hypothesis testing. Testing the construct validity using CFA involves finding a best fit solution to the model by iteratively solving simultaneous equations. In order to find the best fit solution, this model requires the proposed model to be specified prior to the analysis by specifying the number of factors and the relations between the variables and factors. Other requirements for conducting CFA include the condition that the data contains no missing values, and that data are univariate and multivariate normally distributed (Long, 1983). However, the factor analysis method has been proved to be ineffective in the analysis of different organizations. This is because; the theoretical aspects may not have a correlation with the observable aspects. Using this method therefore, may lead to inaccurate conclusions by the organization (West 1990). In addition, the grouping of data by exploratory method may not be possible or may be inappropriate hence hindering its analysis. Reference list Byrne, B. 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