How can Business Schools shape an organizational culture that fosters innovation? : a case study in the Netherlands

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How can Business Schools Shape an

Organizational Culture that Fosters Innovation?

A Case Study in the Netherlands

Student Tara Hilde Jongma

Student nr 11175729

Date June 2018

Institution University of Amsterdam

Qualification Executive Programme in Management Studies (MSc)

Track Strategy

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STATEMENT OF ORIGINALITY

This document is written by Student Tara Hilde Jongma, student number 11175729, who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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3.3 Data Collection ... 28 3.3.1 Primary Data ... 28 3.3.2 Secondary Data ... 30 3.4 Measuring innovativeness ... 30 3.5 Data analysis ... 34 CHAPTER 4: RESULTS ... 36 4.1 Within-case analysis ... 36 4.1.1. Business school 1 ... 36 4.1.2. Business school 2 ... 39 4.1.3. Business school 3 ... 42 4.1.4. Business school 4 ... 45 4.1 Cross-Case analysis ... 47 4.2.1. Strategy ... 48 4.2.2. Structure ... 48 4.2.3. Support Mechanisms ... 50 4.2.4. Behavior ... 51 4.2.5. Communication... 52 CHAPTER 5: DISCUSSION ... 53 5.1. Conclusion ... 53 5.2. Theoretical implications ... 54 5.3. Practical implications ... 55

5.4. Limitations and Future Research... 56

REFERENCES ... 57

Appendix A: Interview Questions ... 64

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List of Tables

Table 1: Competing Values Framework by Cameron & Quinn ... 17

Table 2: Frame analysis model of Bolman & Deal (2017) ... 23

Table 3: Determinants of an innovative culture (Martins & Terblanche, 2003)... 26

Table 3: Listing of the case respondents... 29

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ABSTRACT

With the increasing competition of non-traditional educational providers, university-based business schools are pressured to ensure they are relevant and respond to the needs of the world of practice. The research looks at the organizational culture that is present in Dutch business schools and identifies ways to foster innovative behavior of both academics and supporting staff. A multiple case study takes an exploratory design whereby interviews and secondary data are collected and compared to the existing literature on organizational cultures and innovation. The findings indicate that business schools can enhance an innovative culture by ensuring organized coordination towards innovative initiatives, meaning they consistently have to be part of systematic reviews. This can be achieved through giving innovation a dedicated place in both the business school strategy and organizational structure. It was found that supporting staff can play a crucial role in successfully implementing innovations, and they have to be perceived and positioned as important as their academic colleagues. Another implication of this research looks at the misalignment between expectations for innovation and the current research-dominant culture that is present in business schools. The research adds to the existing literature the role of organizational culture in theories on innovation by providing a view on the context of business schools. It offers senior business school administrators a pragmatic approach to enhance the organizational culture in their business school.

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CHAPTER 1: INTRODUCTION

Education has a crucial impact on knowledge and the development of economies and societies (Anderseck, 2004; Pfeffer & Fong, 2002; Thomas & Cornuel, 2012). Meanwhile, the way individuals pursue education is changing and the accessibility to knowledge has broadened (Brabazon, 2016). In order to stay relevant as providers of knowledge and managerial skills, business schools need to answer to these dynamics through innovation in their curriculum and teaching design.

Innovation is a precondition for success in dynamic markets and a culture that values innovation shapes the right setting to do so (Hogan & Coote, 2014). The focus of this research is on exploring the process of shaping an organizational culture that values and encourages innovation in business schools, in areas such as technology, teaching methods or curriculum design. It offers findings from a multiple-case study of four business schools in the Netherlands. This first chapter provides the reader the purpose and contribution of the research and includes the reasoning behind the research question.

1.1 Background

Business schools have a unique position within universities, often having more autonomy than other colleges and faculties. In contrast to other university faculties, business schools share values with business communities, are tightly linked to the industry and their contribution to a qualified managerial workforce across industries is vital (Garvey, 2015; Muller, Porter, & Rehder, 1997). In addition, customer focus on students and financial status of a business school are of higher emphasis compared to other academic counterparts (Pfeffer, 2004).

1.1.1 History of business schools

The role of a business school can be explained as the development of relevant knowledge and standards for professional conduct concerning management education. The history of the academic field of business

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goes back to when The Wharton School of Business was found in 1881. Business educators started developing norms and professional standards to ensure managers would work with social and public responsibility. In 1954, the Ford Foundation undertook an initiative with the aim of making business education a true academic field that would answer to specific needs of the management profession in the United States. This resulted in a reform of business schools globally with more rigorous educational programs and an increase of academic research (Schlossman et al., 1998). Although the project somewhat improved the position of business schools within the university system, the increasing gap between business school academics and the world of practice made it difficult to answer to the specific needs of management professions (Khurana, 2010).

1.1.2 Calls for change

The concern for business education and their distance to the actual world of practice has been expressed frequently. It is said that the academic output of business education, both in research and education, has not kept up with the changing demands of the labor market. Business schools have developed themselves as closed and conservative systems that work in disciplinary silos without the ability to respond to external demands (Grey, 2004; Muller et al., 1991; Pfeffer & Fong, 2002).

Porter & McKibbin (1988) proposed a number of changes for business schools to become more open and closer to the world of practice. They argued that there was a need for a globalized curriculum that would focus on developing skills for active problem and solution finding, risk taking, soft skills and international management. In addition, education had to be available for individuals throughout their career and lifelong learning had to be made available in business schools. Another recommendation related to bridging the gap between academia and business was to increase the number of professors that were not only rigorous researchers but also had relevant work experience in the industries related to their discipline.

The research of Porter and McKibbin was published thirty years ago, but more recent publications have made very similar recommendations to business schools. Hawawini (2005), for example, identified pressing issues related to the shortage of qualified faculty and the need for soft skills. Pfeffer (2004)

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expresses concern about the continuous disconnect between business schools and the world of practice. In order to answer to these concerns and recommendations made, business schools should be characterized by a pervasive feeling for innovation (Porter & McKibbin, 1988). The follow up question on that can be, is that pervasive feeling existent in business schools or do they remain to be closed and conservative?

1.1.3 Increased competition

In the last thirty years, university-based business schools started sharing the business education landscape with non-traditional providers of education. The number of corporate academies, management training centers and online certificate programs has increased and Nixon & Helms (2002) even argued that they might outnumber traditional business schools very soon.

This creates a challenging situation for traditional business schools. Hawawini (2005) argues that these schools have to adapt to satisfy complex environments and their specific industry demands in order to stay relevant and compete with non-traditional providers of education. This means that the basic model of ‘producing’ graduates following a one-size-fits-all model has to evolve into a model including customized offerings.

1.2 The Research Question

A number of issues have been discussed related to business schools. The necessity for relevance to the world of practice, the need for changes in educational models to facilitate specific demands from the labor markets, as well as the rising competition with non-traditional educational providers. These issues, in combination with the increasing function of knowledge and innovation as drivers of social prosperity, require business schools to ensure their capacity to innovate (Jurše, 2010).

There is a vast amount of literature published about organizational culture and numerous studies have examined the role of organizational culture in relation to innovation outcomes, behavior and efficiency (Dobni, 2008; Jaskyte & Dressler, 2005; Leavy, 2005; McLean, 2005; Sharifirad & Ataei, 2012). It is therefore known that the willingness to change and innovate is strongly influenced by the organizational

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culture. Despite this acknowledgment, literature on this topic in academic environments is limited and there is a growing need for models that can analyze academic organizational cultures appropriately (Hackett, 1990).

There is much literature that gives insights to organizational cultures in non-profit organizations, but Morris et al. (2007) suggest future research has to segment non-profit organizations to make theoretical frameworks more relevant. Business schools are subjects in many journal articles, which implies they are considered as one segment (Bailey et al., 1999; Bevelander, 2012; Kirby, 2005; Pfeffer, 2004). Lorange (2013) offered findings on the traditional culture in business school and argued that changes in technology and social practices are forcing business schools to adapt and become more flexible. A framework on how to do that is yet to be explored in the literature and this research will initiate a response to that gap.

In addition, the slow response of business schools to the calls for change make it relevant to review their organizational cultures. Bennis & O’Toole (2005) mention that business schools must rebalance the organizational culture instead of following pathways forged by traditional academic departments. The absence of a culture that cultivates change and innovation can be one of the causes for the continuous distance between business educators and the world of practice.

The topic of organizational cultures fostering innovative behavior in business schools has not yet been empirically explored. Hence, the aim of this thesis is to answer the following research question: How do business schools shape an organizational culture that fosters innovation?

This research contributes to the ongoing research about organizational cultures and explores the current situation in business schools. For business schools themselves the research attempts to provide a realistic approach on how to adopt and optimize an organizational culture that fosters innovation.

There are four cases included in this research which are public university-based business schools in the Netherlands. Data on those cases include responses from employees that work for the respective business schools and an analysis of reports that were made available to the researcher.

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1.3 Structure of this thesis

This thesis has a total of five chapters. Chapter two provides an overview of existing literature on innovation and organizational culture. It discusses general theoretical concepts and applies them to the context of business schools. The third chapter discusses the research design and method of analysis whereby a new methodology for evaluating the innovativeness of a business school is proposed.

Chapter four presents the results in a within-case analysis followed by a cross-case analysis to identify a link between the organizational culture and innovativeness of the business schools. The final chapter answers the research questions and provides a discussion on theoretical and practical implications, as well as limitations and areas for future research.

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CHAPTER 2: LITERATURE REVIEW

The literature review presents the theoretical background for this research and consists of four parts. First, the concept of innovation is described and contextualized to business schools. The second part offers an understanding of an organization culture in general and analyzes business schools using existing theories. Third, the relationship between strategy, structure, and organizational culture is explained followed by a separate review on strategy and structure in business schools. The final part of this review looks at the relationship between organizational culture and innovative behavior.

2.1 Innovation

Innovation is seen as crucial element for organizational growth. Song et al. (2006) describe innovation as a combined series of activities and goals that produce a new product that an organization needs.

O’

Sullivan (

2000)

describes those organizational needs as higher quality and lower costs that can be achieved through new ways of configuring resources.

For this research a definition is used that includes not only the overall aim of efficiency but also sees innovation adding value to the relevance of an organization. Nelson (2008) defines innovation as ‘the adoption of a new idea integrated throughout all relevant parts of an organization with the aim to increase both efficiency and relevance’. The word adoption in this definition means that a company went further than having the idea and actually implemented the change (Knight, 1967).

2.1.1 Types of Innovation

Innovation plays an important role in creating value and come in a variety of forms (Rowley, Baregheh, & Sambrook, 2011). Knight (1967) distinguishes four types of innovations: product innovation, production-process innovation, organizational structure innovation and people innovation.

Product innovation is concerned with the output of an organization and changes to products and services. Discrepancies between the needs of the customer and the product or service design triggers the

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product innovation process. These customer needs can be explicit and expressed by customers, but it can very well be that customers have unfilled needs that they are not yet aware of (Dougherty, 1992). Product innovation can occur in a routine setting, whereby innovations are part of assigned tasks and responsibilities of individuals or departments. These are smaller innovations to the style and design of a product and have a somewhat regular pattern of occurrence. Non-routine innovations are usually related to the availability of slack resources or when organizations are in distress. The latter is directly related to the performance of an organization.

Process innovation are changes in the way products or services are produced and how these get designed. The underlying idea of process innovation is to improve output productivity and this type of innovation can again be separated into three stages (Utterback & Abernathy, 1975). The first stage are uncoordinated process innovations that tend to happen when processes are relatively new to an organization and are unstandardized. The stage is characterized as organic developments with unformalized procedures. This means process innovations are able to adapt quickly when external changes occur. However, uncoordinated process innovations are not able to optimize overall efficiency for the final product or service. The second innovation stage is referred to as segmental and occurs when products or services increase their presence on the market. This stage involves the formalization of processes and specialization of tasks. However, this innovation process focuses on sub-processes separately and formalizes some but not all. This lack of integration will create a segmented quality in the production process. Finally, systematic process innovation are innovations to processes in very integrative structures. The innovations are selected with care and are costlier as a change in one area tends to require changes in multiple other areas. Redesigning processes in this stage are also much slower due to the scope of the projects.

Organizational structure innovations are similar to how Damanpour (1991) describes administrative innovations. They refer to innovations in operational activities of an organization and include changes in the hierarchy, authority relations and any other formal interactions that are governed by how the organization is structured. Structural conditions and an organizational climate influence the level of innovativeness in an organization (Troy et al., 2001). Structural innovations identify barriers that hinder the

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generation, implementation, and sharing of new ideas. Changes to the access of information, the level of interaction between individuals or departments, or technologies that facilitate communications are areas of structural innovation.

The fourth type of innovation identified by Knight (1967) is people innovation. Innovations create the need for new competences and so changes in staffing levels, personnel or job roles can be necessary (Danneels, 2002). Changes in the practices around training and education or changes to the recruitment processes indicate people innovation. In addition, ensuring that the right incentives are in place for those that design and commercialize innovations can be used to shape the right behavior (Brunt, Lerner, & Nicholas, 2012).

An additional type that is a unit of analysis for many studies is business model innovation, which looks at innovation on the system-level (Dodgson et al., 2013). In essence this concerns how to create or increase economic profits, but business model innovation also helps organizations reconfigure for long-term sustainability (Boons & Lüdeke-Freund, 2013; Seelos & Mair, 2007). Bock et al. (2011) show the relationship between the organizational culture and business model innovation whereby a culture that encourages creativity is more likely to drive successful business model innovation. Also, business model innovation results in new approaches and processes that may require a change in values and behavior (Chesbrough, 2010).

Innovation in products, processes, structures, people, and business models change the way organizations perform and influence their underlying cultures. Innovations in business schools will be explored in the next section.

2.1.2 Innovation in business education

Innovation in business schools constitutes change and improvement that optimize the learning environment (Blouin et al., 2009; Kenny, 2002), which can be done through technological, teaching or curriculum innovation (Hull & Lio, 2006). Business schools are challenged to find innovative and impactful ways to educate future leaders and entrepreneurs while disseminating academic knowledge through

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research. This means they have to juggle between changing industries and bureaucratic public systems. Innovations in teaching and learning will only take shape if business schools create a supportive culture where innovations are encouraged (Zhu, 2015). In addition, the potential of executive education for business schools gives room for creativity and experimentation with their business model outside the scope of governmental funding (Conger & Xin, 2000).

An innovative business school operates with a dynamic approach to the educational system (Hull & Lio, 2006). The intrinsic motivation for innovation of business schools differs from commercial entities that aim to maximize their profits. The reason business schools innovate is that they can create a meaningful impact on student learning and to stay relevant to the communities of practice. Three different types of innovation within business schools will be explained: technological innovations, teaching innovations and curriculum innovations.

Technological Innovation

The rapid increase in technological development creates the need for educators to develop students in such way so they can work with the latest technologies (OECD, 2016). Business schools can support this process by investing in their IT equipment, simulations, technology-supported assessment, and e-learning. These product innovations will offer an appropriate response to the increasing demand for continuous learning and allow for example adult part-time students to do so in a flexible way.

Bottino et al. (1998) argue that implementing technological innovations can be a cumbersome process in educational institutions. Introducing new IT equipment usually require a change in mindset of teachers, affects the student-teacher relationship and leads to revisions of the curriculum. In order to successfully implement technological innovations, business schools need to adopt technologies that relate to their specific teaching and learning philosophy. It also needs to give teachers the right training and exposure to new technologies, so that they can integrate this in their teaching methods.

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Innovation in teaching

Innovation in teaching refers to the changes and enhancements of the teaching methods in business schools. It is part of a process innovation that enhances the way the curriculum is offered. Examples are experiential learning, case methods, essay writing and multi-disciplinary assignments. A motivation to innovate on the delivery method can be that there is an increased demand to measure student performance in different ways, something the traditional teaching methods are limiting (Kenny, 2002). Another reason for using diversified teaching techniques is the increased student motivation and understanding of the curriculum.

Brown (1994) states that students have different levels of knowledge and learning styles and individual differences have to be recognized through delivery of courses in a variety of ways. He argues that universities traditionally have been teaching to serve the average student and ignored the diversity of their audiences. In addition to that, Vieluf et al. (2012) offers a different perspective and claims that teaching practices vary greatly per teacher. Innovations in teaching aim to increase the personalization of student learning, while ensuring a coherent program delivery using the different teaching styles.

Curriculum innovation

The curriculum design in business schools has a high focus on courses and programs that will ensure the understanding of theoretical concepts combined with practical applicability. The curriculum is the product and service that is offered to students as part of their education and so innovations in the curriculum are product innovations. A challenge in curriculum design is that universities and their business schools tend to refer to tradition and base their practices on past experiences. With external triggers whereby disruptive innovations radically change industries, there is a need for universities and business schools to foster change and innovate their curriculum based on new theories and trends (Christensen & Eyring, 2011).

An effective practice for curriculum innovation in business schools is offered by Plewa et al. (2015), who argue that engaging a co-creation process with for-profit companies ensures relevancy of programs

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and courses. Strong links between business schools and industries also allows business schools to follow changes early on, so they can anticipate and adapt their curriculum design at the right time.

2.2 Organizational culture

An organizational culture defines how an organization interacts with its key stakeholders based on underlying norms and values (Barney, 1986). The essence of the organizational culture is to guide the behavior and activities of group members. Members learn from each other and communicate in ways that is governed by policies and procedures. The culture influences how problems are solved, strategies are formulated and how the environment is perceived (Durmusoglu et al., 2014).

2.2.1 Theories on organizational culture

Gordon (1991) describes an organizational culture as a product of successfully adapting to the external environment. Only change in the environment will initiate change in culture as it requires new ways of learning and, more often than not, creates the need to involve new people (Cameron & Quinn, 2011; E. Schein, 1996).

Schraeder et al. (2005) sees the organizational culture as an intangible social construct that is based on history and interactions within an organization, it serves as overall control mechanism to guide behavior (O’Reilly et al., 1991). The social construct emerges from a complex web of interactions and is a subjective phenomenon that can be perceived differently per individual, some are more influenced by a culture than others (Keyton, 2011).

To review the organizational culture and identify areas for improvement the model proposed by Cameron & Quinn (2011) can be used. The Competing Values Framework is a matrix model that combines the organizational focus with the internal structure. It can be measured through a questionnaire that provides quantifiable results to identify dominant culture types. The model introduces the clan culture, the adhocracy culture, the hierarchy culture and the market culture. Those cultural types can be visualized in four

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quadrants that show the structure and focus of an organization or sub-group and helps to determine changes that are needed if a desired culture is not yet reached.

Cultural Type

Description Combination of Values

Clan Family minded, loyalty and tradition are highly valued. Flexible structure and internal focus Adhocracy Encourages innovation and typically has visionary leadership Flexible structure and external focus Hierarchy Rule and policy orientation, strong bureaucratic culture. Stable structure and internal focus Market Result orientated, strong focus on external stakeholders. Stable structure and external focus

Table 1: Competing Values Framework by Cameron & Quinn

Another theory that adds perspective to the organizational culture in business schools was written by Schein (1996). He explains that organizations consist of three sub-cultures each with their own purpose: operator culture, engineering culture and the executive culture. The operator culture links directly to the products and services an organization offers, and values human interaction and communication that is based on trust and teamwork. The engineering culture monitors technology that supports operations and is more abstract in their decision making. Third, the executive culture externally focused, much less structured than the operator and engineering culture and financially driven.

Innovation success or failure depends on the level of understanding of what sub-cultures exist in organizations and to what extend they are aligned to the overall organizational goals. Conflicts arise when there is misunderstanding of interests in the operator culture, the engineering culture and the executive culture. Internal cultural conflicts can have a negative effect on, for example, technological developments in an organization. Therefore, explicit understanding and alignment with overarching organizational goals is crucial for the ability to innovate (Chapman, Hayes, Sloan, & Fitzgerald, 2011).

Although quantitative and exact measurements are not part of the scope of this research, the next section attempts to get a general understanding of organizational cultures in business schools using the frameworks discussed.

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2.2.2 Organizational culture in business schools

Contrary to other academic areas, the business and management disciplines by nature are subjects that emphasize the external environment (Bartell, 2003). Business schools are active participants in the public sector and academic arena while having close connections with the industry. In addition, they need to make comprehensive strategic moves to stay relevant in the emerging knowledge society and adapt a market-oriented academic approach that responds to the increased importance of knowledge.

Using Cameron & Quinn's model, organizational cultures in business schools have elements of both the hierarchy and market culture (table 1). The hierarchy culture has been developed overtime and is strongly influenced by the university system. Positions within academic departments are often based on ranks determined by research performance and the administrative areas have well-defined autonomy structures. In addition, business schools have a strong external orientation (Bartell, 2003) and the market culture is more present compared to other faculties of a university.

In order to stimulate innovation business schools can take a close look at Cameron & Quinn's model to determine how they can best incorporate elements of the adhocracy culture. Similar to the market-culture, the adhocracy is also externally focused. However, an adhocracy culture stimulates flexibility in structures that allow a business school to quickly respond to changes in the environment. Especially with the increased competition from non-traditional business education providers, this is something business schools should consider.

As per Sporn (1999), universities generally have weakly integrated cultures which means there are many divergent values and beliefs reflected in sub-cultures. The sub-culture setting is strengthened by a loosely-coupled system (Weick, 1976). Organizational cultures in universities are characterized by high frequency of social interactions, processes based on historical experiences and hierarchical structures.

Business schools, as part of larger universities, are in many of these aspects similar. The sub-cultures are visible especially in disciplinary silos, something Johnson et al. (1998) describe as unproductive and

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irrelevant. They claim in order to become more innovative, business schools need to eliminate the departmental structures and look at new structures where empowerment and interdisciplinary work is encouraged. Interdisciplinary activities stimulate interactions between sub-cultures and enhance mutual understanding. As Schein (1996) mentioned, more understanding leads to less tension and creates room for innovation.

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2.3 Strategy, structure, and the organizational culture

Weick (1985) has argued that the organizational culture is a construct that overlaps with the strategy of an organization. The strategy can be seen as an outcome and determinant of interactions and ideas based on underlying norms and values (Meyerson & Martin, 1987). Hofstede et al. (1990) relate the organizational culture to the structure of a firm which shapes the interactions between group members. This means that in order to get a culture in place that fosters innovation, the strategy and structure have to be taken into consideration (Zheng, 2010).

2.3.1 Strategy

A strategy is concerned with the creation and use of unique competences and the development of a set of goals to define the position in the market (M. E. Porter, 1991). Defining such position is influenced by a web of beliefs and assumptions, the organizational culture. The managerial decision making is based on formal strategic change processes, but is always affected by social and cultural values that redirect decisions (Johnson, 1992). In the public sector strategizing can be even more difficult as there is often a conflict of interests and values between multiple stakeholders and the dependence on public authorities (Croteau et al., 1999).

Drucker (2012) states that non-profit organizations exist to foster change in individuals and society. Their strategy starts with a central mission statement that expresses the reason of existence. This statement should emphasize a long-term goal that needs regular refocus to make sure an organization serves the way it should and is able to prioritize strategic objectives. The mission statement serves as strategic tool and as a guiding force in which the identity and culture of an organization is expressed (Babnik et al., 2014). If an organization reflects innovation in their mission and strategy, the innovation culture will be more dominant than when, for example, efficiency is predominantly emphasized (Martins & Terblanche, 2003).

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2.3.2 Strategy in business schools

The strategy of a business school evolves around their value chain in which they create, assimilate and disseminate knowledge about business and management (Friga et al., 2003). Recently, the business education marketplace has welcomed non-traditional suppliers that challenge the position of university business schools as traditional credible knowledge providers. In addition, information technology developments bring opportunities for new types of course delivery which broadens business education but also brings uncertainty into the market place (Jurše, 2010). Moving from stable into more unstable environments makes organizations experience difficulties to do good strategic planning (Rhéaume & Gardoni, 2016). The changing educational landscape requires business schools to redefine its mission to operate in a dynamic and competitive academic arena, and so new skills have to be developed for more agile strategic planning.

Ledoux (2005) states that business schools do not have the right cultures in place to support a flexible strategic planning approach. They tend to rely too much on tradition as part of their culture and are resistant to change and agility. Traditional business schools prefer to follow hierarchical paths with analyses and stakeholder maps and use predefined strategic options which satisfies all stakeholders (Labib et al., 2014). However, this way of strategic planning limits resource availability for unplanned innovations and is mainly designed by top management (Christensen & Eyring, 2011). Mintzberg's (1973) also states that universities tend to use an adaptive mode in strategy making which is incremental and reactive to existing problems. This results in innovation that is mainly initiated in response to problems and occurs only when the environment indicates change (Miller & Friesen, 1982).

Kotler & Murphy (1981) argue that business school leaders often lack the time and ability to systematically focus on change pro-actively. Their appointments tend to be around four years, and some have no leadership experience before they get appointed to a role where strategic planning or execution is a priority (Pfeffer & Fong, 2002). Especially in business schools, deans struggle between their internal responsibilities and their external facing role. Strategic planning does not compare to other business settings

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where the most cost-effective strategy is selected but is characterized by inflexibility and a democratized process involving different boards, committees and faculty bodies. Despite these difficulties, strategic planning does force business educators to take a market-oriented approach to long-term planning that benefits their institution as a whole (Jurše, 2010).

This section shows that strategic decision making is influenced by the organizational culture and that mission and strategy influence the culture. This means traditional strategic planning approach as business schools are used to is a result of the current organizational culture. However, as business schools prepare new strategies to face a more uncertain educational landscape, the organizational cultures will change along with that. With the increasing market-orientation of business schools, innovation has to become part of their strategies to eventually translate in a more innovative culture.

2.3.3 Structure

The structure of an organization is the combination of a formal configuration of roles and procedures and the pattern of informal interaction between its members (Skivington et al., 2007). It can be seen as a blueprint that guides behavior of its members and shows connections between departments and subsystems. The structure is needed to decide what underlying culture is needed to foster innovation (Büschgens et al., 2013). Too much structure can limit creativity and organization, while not enough structure diminishes long-term direction (Rhéaume & Gardoni, 2016). The contingency theory incorporates factors such as uncertainty, size and strategy to define a structure for optimal performance (Donaldson, 2015). For example, organizations with low uncertainty are characterized by routines and rules. To ensure a structure works and members adhere to the rules, top management conducts institutional control, mid-level managers perform managerial control and supervision on operational levels is done by supervisors (Daft & Macintosh, 1984). On the contrary, environments with high uncertainty brings the need for a more organic structure where hierarchies are flatter and have less layers for supervision. The structural elements are influencing the organizational culture as it directs communication, decision making, and behavior (Zheng, 2010).

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To review an organizational structure, the model of Bolman & Deal (2017) can be used. They identify four different frames that offer a variety of perspectives on organizational design. A frame is a type of lens in where different set of ideas and assumptions come to light. Frame analysis is useful to diagnose strengths and weaknesses in organizational design, and three out of the four frames proposed relate directly to an organizational structure (table 2). The fourth frame, the symbolic frame, analyzes the organizational culture of an organization and not the structural situation of an organization. Therefore it has been excluded from the table below.

Structural Human Resource Political

Decision making Rational, sequence to produce _{right decision} Open process to produce _commitment Opportunity to gain or exercise _power Reorganizing Realign roles and responsibilities _{to fit task and environment} Maintain a balance between _{human needs and formal roles} Redistribute power and form _{new coalitions} Evaluating Way to distribute rewards and _{control performance} Feedback for helping _{individuals grow} Opportunity to exercise power

Approaching conflict

Maintain organizational goals by having authorities to resolve conflict

Develop relationships by having individuals confront conflict

Develop power by bargaining, or manipulating others to win

Communication Transmit facts and information Exchange information, needs, _feelings Influence or manipulate others

Meetings Formal occasions for making _decisions Informal occasion for _{involvement, sharing feelings} Competitive occasions to win _points Motivation Economic incentives Growth and self-actualization Coercion, manipulation

Table 2: Frame analysis model of Bolman & Deal (2017)

The first frame is the structural frame. This emphasizes formal roles and responsibilities and works towards a strategy with measurable goals. Depending on the environmental fit, the structure can either rely on vertical top-down coordination or work better in a matrix structure. These decisions are based on what

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works most productive. When companies rely too much on this structural frame and ignore the others they can become too bureaucratic which negatively effects the innovational behavior.

The second frame, the human resources frame, assumes employees are committed to organizational prosperity. It aligns self-interest with the company’s goals and encourages a structure whereby the collective feeling is enhanced. The focus lies on empowerment in order for individuals to perform well in their job, as well as on social interaction within the organization as a whole.

The political frame provides a perspective on visible or invisible conflicting interests and identifies the existence of coalitions. Looking at an organizational structure through this lens shows how organizations get things done and who has what power in decision making. It also helps understanding the expectations from different stakeholders and where priorities are not aligned.

In the next section, the organizational structure in business schools will be discussed and theories from this section used.

2.3.4 Structure in business schools

Organizations have strong institutional cultures when their units are interdependent (Masland, 1985). Managing a university as one large organization is practically impossible given the diverging research and disciplinary areas they have. This is why universities have disciplinary areas grouped together in faculties or schools that each have their own internal structure. Business schools can either offer curriculum and research that only focus on business and management but can also jointly form a faculty with areas such as economics or technology.

When taking the political frame and look at a business school structure, it is clear that they have a unique position within universities and often enjoy more autonomy than other colleges and faculties (Muller et al., 1991). The autonomy gives business schools the ability to be more flexible and responsive to market demands from the industry. However, business schools are part of universities to ensure an academic approach to education and research (Pfeffer, 2004). This shows that business schools find themselves in a continuous tension between two groups of stakeholders, external industry demands well educated graduates

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with practical and relevant knowledge, while the internal relationship with the university requires high quality academic output. Although internal structures in business schools vary by country and different models of governance are used, all business schools find themselves in complex situations where many non-routine decisions involve diverging interests from stakeholders (Michael R. Ford & Douglas M. Ihrke, 2016).

The routine operations in a business school are usually regulated through careful procedures and a bureaucratic model. It mainly reflects the structural perspective from Bolman & Deal (2017) where the rational decisions aim to satisfy strategic goals. This is most evident in the management of a business school where decision making follows clear autonomy structures.

When looking at departments within business schools a more collegial structure is found. This is where the human relations frame comes in. The dynamics between faculty members are based on a democratic setting where members are respected based on their expertise and research output rather than on a certain position in the organizational structure (Baldridge, 1971).

The structure of an organization is a key determinant for the organizational culture. Business schools need to identify the right balance between their routines for optimal efficiency while creating room for innovation.

2.4 The organizational culture that fosters innovation

The culture in an organization is shaped by the behavior and activities of individuals. This means that innovation processes are stimulated if the organizational culture directs pro-active behavior and encourages experimentation (Büschgens et al., 2013). Kanter (1983) addresses that organizations are most innovative if their culture emphasizes diversity and collaboration and have intersecting territories that facilitate cross-functional communication. Cross-cross-functional interactions will allow for exchanges involving different perspectives that will lead to new inventions (Ven et al., 2000). Tesluk et al. (1997) add that enabling an innovation culture is done by conveying the right expectations and goals to employees, complimented with

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reward and task orientation and socio-emotional support. Organizations that foster innovation are characterized by having pride and faith in people’s talent which boils down to teams that are based on mutual trust (Drucker, 1993).

The determinants of a culture that fosters innovation are summarized by Martins & Terblanche (2003) in table 3. If innovation is part of the shared norms and values and assumptions are enacted in the policies and systems, we can speak of an innovative culture. This has a direct influence on the degree to which innovation is stimulated.

Strategy Includes innovation emphasizing future orientation and customer/market orientation (Sharifirad & Ataei, 2012)

Structure Integrative structures allow flexibility and freedom, stimulates cooperation (Kanter, 1983) Support mechanisms Rewards and recognition that reward entrepreneurial behavior, support innovation with the

availability of resources (Dobni, 2008)

Behavior Encourages innovation by tolerating risk and mistakes, setting clear expectations and handling conflict appropriately (Johnson, 1992)

Communication Open communication and emotional safety (Tesluk et al., 1997; Ven et al., 2000)

Table 3: Determinants of an innovative culture (Martins & Terblanche, 2003).

Bryson (2015) notes that public institutions experience difficulty to find the right balance between fostering an innovative culture and exercise the right levels of control. Business schools are challenged with changes in market demands and are pressured to innovate (Schraeder et al., 2005). However, the accountability for public spending and the consequences of making mistakes eliminates the possibility to change as fast as private industries. Business schools are part of the a governmental system and their cultures will continue to be influenced by public bureaucracy (Parker & Bradley, 2000).

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CHAPTER 3: Methodology

This section describes the research methodology that has been used to collect and analyze data to answer the research question: How do business schools shape an organizational culture that fosters innovation? The key objective using this methodology was to identify characteristics used to shape an organizational culture that values, encourages and fosters innovation.

3.1 Design

A literature review and multiple-case study has been conducted following an inductive theory-building approach. The positivist ontology of this research is concerned with the actual process of shaping an organizational culture, that is the unit of analysis, and will not consider individual interpretations given by the research subjects (Porta & Keating, 2008). Precisely, an attempt is made to provide a deeper understanding of implementing an organizational culture that fosters innovation in a business school.

The research takes an exploratory design where the holistic case study analyzes organizational cultures of four different business schools. These four cases are similar in a sense that they are all part of public research universities based in the Netherlands which allows for comparison on processes within a similar educational system. The study especially tries to expose why decisions were taken, how they were implemented and if the desired organizational culture was reached (Yin, 2009). It seeks to identify patterns that can be compared to the existing literature. The open-ended interviews will help to uncover unknown relations between factors (Saunders & Lewis, 2012).

3.2 Context and Sample

A business school is an academic unit within a university that grants degrees in business and management. Higher education has fundamental differences between countries and business education in Europe has followed different pathways in their evolution resulting in diverging structures in its sub-regions (Kaplan, 2014). The sample in this research includes business schools that are recognized as part of research

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universities in the Netherlands. Of the ten Dutch business schools, five have been ranked in the top 100 of European Business School rankings in 2017 by the Financial Times and more than half are accredited by one or more international accreditation agencies.

By limiting to the Netherlands, the case study will use the literal replication logic, which means cases are used to validate each other. This replication design will enhance the ability for analytic generalization (Yin, 2009). An emphasis will be placed on comparing processes that resulted in successful change and those that did not give the desired result.

All university-based business schools from the Netherlands have been requested to participate as part of the theoretical sampling process, four have agreed to support the research. Three are faculties of economics and business, one is a school of management. As per Eisenhardt (1989), four cases is appropriate to generate a theory with sufficient complexity.

3.3 Data Collection

Rigorous research requires careful collection procedures and ensures triangulation that increases confidence in the findings. This research includes a multi-method qualitative research using both primary and secondary data.

3.3.1 Primary Data

Interviews have been conducted in order to identify the organizational culture in business schools and the processes put in place to foster innovation in technology, teaching methods and curriculum development. This primary data was collected through semi-structured interviews which is useful when it is unsure what answers will be received. A list of predetermined questions was used to ensure topics were covered but were not leading the structure of the interview. The topics predominantly focused on the specific setting of a business school and were identified following a review of literature. However, exact propositions may bias and limit findings, so there will be no specific relationships formulated a priori (Eisenhardt, 1989). The interview questions used can be found in Appendix A.

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The respondents were first asked to describe the organizational culture of the business schools followed by probing questions about the cultural characteristics. Also, questions were asked to what extend the business school had an innovative culture, how innovations were stimulated and to what extend they were communicated throughout the business school. The respondents were asked to talk about the strategy and structure and to what extent this encouraged innovative behavior. After transcribing the first interviews a number of additional questions were asked to see if a pattern could be identified.

The dean of a business school is the head of the organization and therefore is an important individual to be interviewed. Identifying the other interviewees as part of the theoretical sampling was done in collaboration with the deans. Those stakeholders had to be informants that have impact on innovation processes and influence on the organizational culture. This allows data collection to include factual information about the current culture, as well as cultural changes that happened over time to foster innovation in a business school.

The names of the business schools are not exposed. Instead, references are made to business school 1 through 4 throughout the research. Subject names are anonymized and only a reference to the respondent’s title will be made. These are not exact titles but have been standardized to ensure anonymization. Table 4 below provides an overview of the case respondents.

Case Interview Case Interview

Business school 1 Dean Business school 3 Dean

Vice-Dean Vice-Dean

Innovation Coordinator Department chair Head of Accreditation

Business school 2 Dean Business school 4 Dean

Vice-Dean Innovation Coordinator

Vice-Dean Head of Accreditation

Head of Accreditation

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3.3.2 Secondary Data

Multiple sources of secondary data were used. First, the websites of the participating business schools provided factual insights. The information was used for triangulation of the interview data or to gather additional organizational information of the business schools. In addition, secondary data was retrieved from the database of AACSB, an international accreditation agency. This system includes qualitative and quantitative information submitted voluntarily by the business schools on annual basis1_{. Three of the four} participating business schools submitted their data for 2017-2018, the fourth school provided the researcher a strategy report with some relevant data points. The researcher also received verbal consent to use reports submitted for AACSB accreditation review. These documents included relevant data on the strategy, structure and future plans for innovation. A limitation with using the reports is the variance of submission dates, which made comparisons based on this data impossible.

3.4 Measuring innovativeness

The data collected allowed the researcher to identify level of innovativeness for each business school and rank them accordingly. This ranking is necessary in the positivistic approach of the research that seeks the relationship between the organizational culture and innovative behavior of business schools.

Innovativeness can be measured in a variety of ways and methodologies to measure depend on the intentions of the research (Goldsmith & Foxall, 2003). With creating a ranked order of the cases that joined this research process tracing is possible. Process tracing will allow for finding causal dynamics between the business schools and their level of innovation (Bennett & Checkel, 2014).

A ranking of the level of innovativeness in business schools is non-existent. It is a difficult concept to quantify and no validated measurement tools for business schools have been published to date. In this research an attempt is made to, based on certain dimensions, create a relative order evaluating the level of innovativeness in business schools. For each dimension a description is provided below, and the respective

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ranking can be found in table 4. The schools received a score per dimension from 1, most innovative to 4, least innovative. The final ranking is based on the average score of all dimensions, each score has the same weight, and will be used for this research.

International accreditations

International business school accreditors provide important advantages, such as legitimization towards stakeholders (Julian & Ofori-Dankwa, 2006). Only recently have these accrediting bodies enhanced their standards with an emphasis on innovation. AACSB, the Association to Advance Collegiate Schools of Business, adopted new standards in 2013 whereby business schools are required to innovate to pursue continuous improvement in their courses. Since 2013 schools are required to provide specific action plans towards educational innovation in their reports for EQUIS, the European based accreditation. It is the commitment to those standards that will force business schools to look at the way they innovate and implement new plans that suit their strategy and financial status. Three of the four business schools achieved one or more international accreditations.

Within this dimension no distinction can be made in innovativeness between the three accredited schools and therefore all three are ranked first. Achieving accreditation means that a business school meet a set of standards, and one school can therefore not be ranked higher than the other. The business school that has not achieved an international accreditation is ranked as fourth in this dimension.

New programs offered

It is important that business schools continuously develop their portfolio of degree programs offered in order to respond to current and future changes in the industry (Friga, Bettis, & Sullivan, 2003). To look at the current situation of degree innovations in the business schools that participated in the research, new programs introduced since 2015 have been included in the review. Developing and introducing new degree

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programs takes several years. Program data on the website of the Dutch Ministry of Higher Education2 indicated that a typical period between successfully achieving governmental program accreditation and the actual start date of the program is typically one to two years.

Also, joint degrees with other faculties or other universities have been taken into consideration and influenced the ranking positively. Designing educational programs in collaboration with other faculties or other universities challenge the traditional silos that exist in business schools and result in innovative program curriculum (Ishida, Sawaragi, Nakakoji, & Sogo, 2017).

In this dimension business school 2 scored highest. The business school restructured its bachelor portfolio, introduced an interdisciplinary program with another faculty and a new specialized MBA program. It also renewed its PhD programs. Business school 1 was ranked second. They also renewed their bachelor portfolio, added a new master program specialization and introduced a joint program with another university. Business school 4 is ranked third since it introduces one new bachelor and one new master program, and business school 3 is ranked fourth in this dimension as they have only changed their existing PhD degree program since 2015.

Technological development

Technological innovation contributes to higher levels of efficiency in organizations. In addition, students must be educated so they can work with the latest technology and are prepared to adapt to technological change. The rank for this dimension is based on the increasingly prevalent use of online learning. As per Garrison & Kanuka (2004) online and blended learning is going to transform higher education. Business schools in the Netherlands are aware of the upcoming changes and some are ahead by having redesigned some of the courses.

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The reports made available for this research included plans to implement online and blended learning. Information on the actual offerings of online education has been found on the business school websites and Coursera3_{, a platform that provides university content online.}

Business school 1 offers two MOOC’s, which stands for Massive Open Online Course. They also offer executive education in a blended format where some of the classes are online and offer master degrees with online group tutorials. Business school 2 offers one MOOC. Both business school 3 and 4 do not have online programs but do offer online preparation programs for incoming students. Business school 3 is implementing online learning components in the teaching methods of all of its programs and recently completed a pilot project for that.

Dedicated innovation teams

The final dimension looks at the investment in supporting staff for innovations in teaching and learning. Kirby (2005) argues that for business schools to be innovative and embrace entrepreneurial activities, professional staff is needed. Professionals with knowledge about innovation implementation have to be dedicated to support the activities of the academics in program innovation, online learning and teaching innovation. In ranking the business schools that join this research, a review has been done on the extent to whether or not specific support teams, dedicated for innovation in the business school, are added in the organizational structure.

Reports made available for this research indicated that business school 1 has an established learning and innovation team since 2015 and business school 3 is currently establishing a learning innovation team. The other two have academics that spend part of their time on innovations in teaching and learning, they have both been ranked third.

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International accreditation

New degree programs

introduced Technological development learning support Innovation & Total Score

Business school 1 1 2 1 1 1.25

Table 5: Cases ranked by level of innovativeness

The table indicates that, based on the dimensions used, business school 1 shows the highest level of innovativeness.

3.5 Data analysis

All interviews were recorded and transcribed in Dutch language. The primary data collected was imported into the qualitative data analysis program NVivo. This software allowed the researcher to structure the transcripts and code all interview data. Coding was done during and after the interview process, which allowed for immediate comparison to existing theories (Eisenhardt, 1989).

Inductive research does not make use of predefined coding, so codes were created based on information the interviewees provided. The coding followed the grounded theory analysis structure proposed by (Strauss, 1987). First, the researcher went through the interviews and applied open coding by assigning codes to paragraphs or specific sentences. This was done twice to ensure that the right codes were assigned to the data. Secondly, themes were identified through axial coding, followed by selective coding where themes were systematically linked to the core of the research. During the coding process, comparisons were made to the existing literature. It made sense to group the codes according to the framework of Martins & Terblanche (2003) so a structure would emerge that was relevant to answer the research question.

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In addition to the coding of interviews, excerpts from the secondary data were also imported into NVivo. When the selective coding of the interviews was done, the secondary data was also assigned to codes and themes which will enrich the data and ensured triangulation during the analysis. The codebook can be found in Appendix B.

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CHAPTER 4: RESULTS

The results chapter of the research presents findings from the analysis of primary and secondary data. As this research takes an inductive approach, emergent insights from the data are identified through within-case and cross-within-case analysis (Farquhar, 2012).

The first part of this chapter is the within-case analysis, which explores each business school as single entity. Subsequently, the findings from within-case analysis are compared across cases in order to provide an answer to the research question.

4.1 Within-case analysis

The within-case analysis for the business schools is done using data from fourteen interviews as well as the AACSB accreditation reports that were made available to the researcher. The next sections present the innovations per business school and its organizational culture. The innovations follow the structure of discussing technological developments, teaching method and curriculum innovations, and are described to give a richer contextual understanding of each case. The organizational culture is described using the Martins & Terblanche (2003) framework which was discussed in the literature review chapter 2.4. This framework discusses the innovativeness of a culture by reviewing the strategy, structure, support mechanisms, behavior, and communications in each business school.

4.1.1. Business school 1

Innovations

Business school 1 is conducting technological innovations through adopting a new IT infrastructure and cloud-based learning management system that is using innovative features and mobile apps for enhanced teacher-to-student interaction. With support from the parent-university, they are developing e-learning to all of its programs following successful completion of pilot projects. They also started offering

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open and executive programs online through an external platform Coursera which will be rolled out further in the next years.

As for teaching method innovation, the business school has taken a critical look at their teaching model. It was found that many undergraduate courses had basic study formats with standard lectures. They have launched and learning and innovation team three years ago that is pro-actively working with each program director to implement new ways of teaching. This team consists of support staff with pedagogical knowledge to help faculty members improve their teaching methods.

“We try to show faculty members that the time has come where you cannot get away with just doing high quality research, you have to demonstrate high quality education too. There are new techniques for this

and we try to support this with a learning and innovation team.” – Head of Accreditation

As for the curriculum, the business school has started a project called ‘boost the bachelor’. A team of academic directors and non-faculty staff is working on a new format and new study profiles are created by the learning innovation team. The design has been approved internally and the project will be finished in the next two years.

Organizational culture

The accreditation report describes the business school as entrepreneurial driven by continuous improvement and a strong research culture. This culture translates into a well-organized, forward-thinking business school that works on improving processes in an efficiency-driven manner. The interviews confirmed this as the respondents emphasized the focus on organizational efficiency and continuous improvement, as well as the room for new ideas and entrepreneurship.

The focus on establishing a strong culture started in 2013 when the school introduced the strategic priority to increase the market-orientation and decrease the dependence on governmental funding. Changes in culture focused on creating a collective mindset, which according to the respondents helps the business school’s market-orientation as one institution. They started a goal-setting program whereby staff, students

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and other stakeholders such as board members have to establish long term goals that will help themselves as well as the university to achieve its strategic objectives. Respondents mentioned that the goal-setting program motivates staff to care about the mission and success of the business school. In addition, their AACSB accreditation report mentions the importance of innovation both for teaching and research frequently which confirms their focus on this matter.

Business school 1 is structured as a school of management that is separated from the faculty of economics. The structure in the business school follows a matrix model that was implemented twenty years ago. The main characteristic is that the money flow goes through this matrix between program directors and departments. The structure in business school 1 focuses on clarity and ensuring that academics get the room to focus on innovations that suit the school’s objectives.

As the support mechanisms for innovations were limited, investments have been made in support staff that have professional experience and can elevate new initiatives. As for rewarding innovative behavior, one respondent mentioned the business school should celebrate milestones and successes more. Other respondents from the school mentioned that new innovations get relatively quickly picked up by a regular control cycle to ensure it becomes part of day-to-day operations in the organization. This, according to the respondents, requires thorough support from the leadership of a business school.

“Innovation can be a challenge, but overall it is part of all job descriptions. We have a learning and innovation team who support individuals to implement innovations properly, they have the expertise to

provide that support.” - Dean

Respondents indicated that the current research model does not stimulate innovative behavior as the academic community does not allow much room for risk taking. As for the education and other innovations, the business school invested in the last years to go from individual innovations to an organized innovation system, which has stimulated the mindset of continuously looking for ways to do better. Another important consequence of the steps taken towards organized innovation is the culture change from individualism towards a collectivistic mindset.

How can Business Schools shape an organizational culture that fosters innovation? : a case study in the Netherlands