Re-conceptualizing consultancy by stimulating the innovative behaviour of young managements consultants

Hele tekst

(1)Re-conceptualizing consultancy by stimulating the innovative behaviour of young Management Consultants. Study:. Executive programme in Management Studies – Track Strategy. Author:. Christian W.N. Lieverse. Student number:. 10684514. Supervisor:. Prof. Dr. J. Strikwerda CMC. Submission date:. 30 January 2016.

(2)

(3) Statement of Originality This document is written by student Christian Lieverse 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.. Signature:. 3.

(4) 4.

(5) Master Thesis January 2016. Amsterdam Business School University of Amsterdam Executive Programme in Management Studies MSc. Business Administration Strategy Track. PwC Mindscape Amsterdam, The Netherlands. Student:. C.W.N. Lieverse. Student number:. 10684514. Supervisor UvA:. Prof. Dr. J. Strikwerda CMC. Supervisor PwC:. S. Schotanus. Submission date:. 31st January 2016. Cover picture taken from:. http://www.ag-visualisierung.de/portfolio/illustration-werbung/3dillustrationen_puzzle.html. Copyright © 2016 by Christian Lieverse. All rights reserved. This document or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher except for the use of references in academic papers. 5.

(6) Acknowledgement Great appreciation and gratitude for the help and support during this research project go to the following persons who have all contributed in making this study possible. Prof. Dr. J. Strikwerda CMC, for inspiring me on the topic of Management Consulting and for his valuable support, guidance and hugely useful input during this research. I highly appreciated and enjoyed the discussions we had. S. Schotanus, for giving me the opportunity to conduct this research at PwC, for making it possible to make this research a ‘Mindscape’ effort, for his timely feedback and very helpful support and guidance throughout the process. S. Pajic MSc., for helping me designing the questionnaire and for her support with the data analysis, including reviewing the statistical computations. Leonie Wiedom MSc., for her time and effort in checking this thesis for errors and for her support and encouragement during the process of conducting this research.. 6.

(7) Table of Contents Statement of Originality..................................................................................................................................... 3 Acknowledgement.............................................................................................................................................. 6 List of Figures and Tables.................................................................................................................................. 9 Abstract ............................................................................................................................................................ 10 1.. Introduction............................................................................................................................................... 11 1.1 Relevance ............................................................................................................................................... 11 1.2 Research motivation ............................................................................................................................... 13 1.3 Research design and approach................................................................................................................ 14. 2.. Theoretical Framework............................................................................................................................. 16 2.1 Defining Innovative Behaviour (generating cash flow) ......................................................................... 16 2.2 Economic awareness .............................................................................................................................. 19 2.3 Experienced complexity leadership........................................................................................................ 21 2.4 Monetary incentives ............................................................................................................................... 23 2.5 Ambition and personal drive .................................................................................................................. 24 2.6 Conceptual Model .................................................................................................................................. 26 2.7 Summary of the hypotheses.................................................................................................................... 27. 3.. Methodology............................................................................................................................................. 28 3.1 Participants ............................................................................................................................................. 28 3.2 Procedure................................................................................................................................................ 29 3.3 Sources ................................................................................................................................................... 29 3.4 Measures................................................................................................................................................. 29. 7.

(8) 3.5 Reliability ............................................................................................................................................... 34 4.. Results....................................................................................................................................................... 36 4.1 Introduction ............................................................................................................................................ 36 4.2 Descriptive statistics............................................................................................................................... 36 4.3 Correlation analysis ................................................................................................................................ 40 4.4 Regression analysis ................................................................................................................................ 41 4.5 Regression Models ................................................................................................................................. 42 4.6 The effect of economic awareness on innovative behaviour (H1 & H4) ............................................... 42 4.7 The effect of leadership on innovative behaviour (H2 & H5) ............................................................... 43 4.8 The effect of monetary incentives on innovative behaviour (H3 & H6)................................................ 44 4.9 Summary of hypotheses testing.............................................................................................................. 45. 5.. Conclusions and discussion ...................................................................................................................... 47 5.1 Main conclusions.................................................................................................................................... 47 5.2 Answering the main research question................................................................................................... 49 5.3 Discussion .............................................................................................................................................. 49 5.4 Recommendations .................................................................................................................................. 51 5.5 Suggestions for further research............................................................................................................. 53. 6.. Reflection.................................................................................................................................................. 55. 7.. References................................................................................................................................................. 57. Appendix 1: original invitation to the online survey ....................................................................................... 63 Appendix 2: reminder for participating in the online survey........................................................................... 64 Appendix 3: The online survey........................................................................................................................ 65. 8.

(9) List of Figures and Tables Figure 1: The conceptual model. 26. Figure 2: Distribution of the survey results by age. 37. Figure 3: Distribution of the survey results by gender. 37. Figure 4: Distribution of the survey results by job level. 38. Figure 5: Distribution of the survey results by line of service. 38. Figure 6: Distribution of the survey results by years of working experience. 39. Figure 7: Conceptual model based on research findings. 46. Table 1: Overview of the hypotheses. 27. Table 2: Summary of the scales and sources. 34. Table 3: Cronbach’s alpha and number of items per variable. 35. Table 4: Descriptive statistics for averaged scales. 40. Table 5: Means, Standard Deviations and Correlations. 40. Table 6: Summarized mediation analysis. 42. Table 7: Evaluation of hypotheses. 45. 9.

(10) Abstract Even though much research has been done on the role and the activities of management consultants and on innovation in general, little is known on the importance and contribution of young professionals in large (management) consulting firms with regards to macro-environmental changes, such as market expansion, globalization, industry deregulation and disruptive technological advances. This study examines what stimulates innovative behaviour amongst young management consultants. Based on theory and empirical analysis, three possible causes that could either stimulate or hinder innovation in the field of Management Consulting are assessed: (1) the awareness of the economic role of the consultant, (2) experienced complexity leadership and (3) relevant monetary incentives. A sample of 324 young management consultants from a large management consulting firm (PwC) revealed that higher levels of innovative behavior can be achieved when young management consultants (1) are more aware of their role in the economy, (2) experience greater levels of complexity leadership and (3) receive the relevant monetary incentives. A mediating effect of a young professional’s ambition has not been found. The findings are discussed in terms of macro-economic implications and practical recommendations for this large management consulting firm.. 10.

(11) ‘Creative destruction implies the destruction of some activities as a necessary element in the growth of others’ (Metcalfe, 2001).. 1. Introduction 1.1 Relevance In 2013, the Dutch scientific council for government policy (WRR) launched a report about the learning economy. This report stated that the level of innovativeness of a country is partly determined by the ability of business and individuals to absorb knowledge and use this to create new products or services. The report states that innovation is becoming a continuous process and that by shortening the cycle of innovation, a cooperative form of production of knowledge will become more important (WRR, 2013). The report continues to state that ‘Renewal processes are primarily a part of the market dynamics’ and that this is rarely a linear and straightforward process. Constantly changing circumstances require a continuous adaptability which finds new solutions to new problems and dismisses old solutions which are released to old problems, like Schumpeter's famous formulation: "this process of creative destruction is the essential fact about capitalism." It is an evolutionary process without a clear predetermined direction, which experiments with new ideas, builds on what works and which ideas that do not work will be overridden. Companies or organizations that cannot adapt to new circumstances will inevitably disappear in the economic renewal process of "creative destruction" (WRR, 2013). This will also affect the profession of management consultants, as management consultants act on the basis of and within the context of the institutions of the second industrial revolution which are subject to technological and economic changes since about 1970 (Strikwerda, 2013). What makes it interesting is that the management consulting’s fundamental business model, where smart outsiders were sent into organizations for a finite period of time and asked to recommend solutions for the most difficult problems confronting their clients, has not changed in more than 100 years (Christensen & Wang, 2013), meaning that the profession will inevitably face challenges in the near future. But it is not the only thing that is. 11.

(12) currently affecting the profession of management consultancy. The established strategy consulting firms are also threatened by changing client demand and new competitors (Van den Bosch, Baaij, & Volberda, 2005). Furthermore, the pace of change being managed by the traditional clients of consulting firms will continue to increase, with devastating effects on consultancy firms that do not keep up (Christensen & Wang, 2013). For management consulting firms, this is the time to take a look in the mirror and ask themselves whether their current role is actually the role that a consulting firm should have within the economy. Should a management consulting firm provide business services, which includes assisting on the non-management tasks of implementing management’s solutions (Baaij, 2014)? Or should they provide management consulting that is about assisting the client breaking away from conventions, routines, etc. to achieve a breakthrough in performance, involving breaking away from conventional MBA-concepts and tools (Sloterdijk, 2005). As Strikwerda (2013) puts it ‘one could question whether there is a need to reinvent the profession of management consultancy, applying the principle of creative destruction to the field of management consultancy before others do so’.. But what should be the task of a management consultant? Managers can be bounded rational, inhibited and suffering from bounded knowledgeability. It is the job of the management consultant to assist clients in breaking away from conventions and routines (Sloterdijk, 2005) and to change the clients’ worldview through the changes in industry or business, and to help them understand the more fundamental changes in society beyond intuition. Furthermore, management consultants shape decisions to be made and implemented and act as transmitters of knowledge. They should help clients in achieving higher levels of growth by breaking with boundaries and rules and through cost efficiency, adaptive efficiency and innovation. The ultimate objective of a management consultant is to enable economic growth and higher labor productivity, resulting in more welfare.. Though the full effects of disruption have yet to hit consulting, the observations suggest that this would only be a matter of time. It is therefore recommendable to also investigate the new and upcoming ventures (like Twitter, Uber, Airbnb) and try to get on board as quickly as possible, and being able to add value to these 12.

(13) kinds of businesses. Upcoming businesses will further develop their winning propositions and will break through to the top of the market, where they will make the existing market leaders irrelevant in one fell swoop. A familiar example would be the destruction of Kodak (Gilbert & Bower, 2002). Obviously, this does not count for all firms, though. Many larger companies like IBM, Procter & Gamble, Omron, CEMEX, Cisco and Banco Real move as rapidly and creatively as much smaller enterprises (Kanter, 2008). They are able to respond quickly and inventively to opportunities wherever they arise and rely on clear standards and disciplines, including standardized processes. However, whereas half a century ago, the life expectancy of a Fortune 500 company used to be around 75 years, this is now less than 15 years and declining even further (Denning, 2011). This indicates a trend and requires a changed vision on management consulting.. 1.2 Research motivation Given the changes that the management consulting industry can expect, we need another type of consultancy that focuses less on process-reengineering and consulting as a business service and more on conceptual thinking and reconceptualization of business models (Phelps, 2013). Presently consultants have a tendency that they need to answer the decline in their industry by reinventing their business models (de Man, de Man, & Stoppelenburg, 2015). From the theory on management consultancy developed by McKenna (2006), the description of the roles in the economy by Sloterdijk (2005) and Strikwerda (2013) in combination with the changes in the basic conditions between the Second Industrial Revolution and the Third Industrial Revolution (especially the consequences from the shift from tangible assets to intangible assets), it might be concluded that the issue is not so much new business models for consultants, but most likely a combination of reinventing the professional model, respectively a different role of consultants in the economy. Phelps and other economists suggest that the once bread and butter methods of consultants, mainly based on MBAtools, now have become a limitation for economic growth, and therefore need to be reinvented or reconceptualised, beyond the traditional MBA-paradigm.. 13.

(14) The current research deals with this matter through a study on the innovative behaviour of young management consultants within a large management consulting firm (PwC). It assesses a number of causes which might motivate young management consultants (who are normally relatively quick in embracing new, disruptive developments) in showing breakthrough innovative behaviour, and making it part of their tasks, rather than by having them gaining experience only by carrying out assignments (business services). The following research question was developed: Main research question: What are causes that either stimulate or hinder innovation in the field of Management Consulting with young professionals in the sense of reconceptualization concepts for management and organization? Of course, many different factors can influence the innovative behaviour of young professionals. In order to delimit the scope of this research, three potential structural causes that could stimulate or hinder innovation are selected: the awareness of the role of the consultant in the economy, experienced complexity leadership and relevant monetary incentives. Personal ambition of a young professional is examined for its mediating effect on the relationship between one of the mentioned potential causes and their innovative behaviour. In order to answer the main research question, the theoretical background of innovation and innovative behaviour, economic awareness, complexity leadership, monetary incentives and ambition will be discussed in chapter 2.. 1.3 Research design and approach This paragraph will justify the chosen research design and approach.. Research design The study focuses on the behaviour of young professionals and their drive for showing (or not showing) innovative behaviour. This is done by assessing three potential drivers of innovative behaviour under young 14.

(15) professionals and a possible mechanism underlying their effect. Data is collected by inviting young management consultants to participate in an online survey. The collected data is statistically tested on reliability and validity through the use of standardized statistical tests, such as regression, in order to draw logical and valid conclusions. SPSS is used as a tool for performing these tests. As the research at PwC is a snap-shot of the current situation, the research can be considered cross-sectional. Despite the fact that the cross-sectional nature of the data involves certain limitations to detect causal relations, the study aims at explaining a causal relationship between the different variables and should explain a specific occurrence. This implies that the research is explanatory. The findings of the research should then be the starting point of further research. Data is collected from different types of people, such as advisors and accountants with different grades, ages, gender and backgrounds. Research approach The current research involves a deductive approach; thus the paper starts with a review of the existing literature on the various topics that are assessed in this study. After having determined an adequate methodology the survey has been designed and the data has been collected. In the ‘results’ section, the data is verified and analysed, using various regression techniques. In the final section, conclusions are drawn and discussed and recommendations are given to the management of PwC.. 15.

(16) 2. Theoretical Framework According to de Bretani (2001), ‘firms are facing major market expansion, globalization, industry deregulation and significant technological advances, and therefore face both the opportunity and necessity to apply their resources and competencies in a creative way in order to take advantage of the unprecedented potential here’. Furthermore, as indicated in the introduction, the established strategy consulting firms are being threatened by changing client demands and new competitors (Van den Bosch, Baaij, & Volberda, 2005). This stresses the importance of creating an environment in which entrepreneurial, or innovative, behaviour can evolve, as constantly developing new knowledge products is crucial for suppliers to maintain demand for their services (Heusinkveld & Benders, 2005) .. This is not something new. A lot of research has been done on these developments. However, little research has been performed on the importance and contribution of young professionals in large (management) consulting firms to these major environmental changes. As a human being, executive, manager, worker or consultant, we face difficulties being aware of all that we could be aware of, or should be aware of (Strikwerda, 2013). Young professionals might therefore be a source of competitive advantage when they have a certain belief or personal drive, when they experience strong and inspiring complexity leadership from their superiors or when this is stimulated through the use of monetary rewards.. The current chapter assesses the theoretical background of the various topics discussed in this research. It provides definitions and presents the hypotheses.. 2.1 Defining Innovative Behaviour (generating cash flow) Innovation and innovation management has been an increasingly covered topic in scientific and management literature for the past 35 years. The reason for this interest is likely to be the realisation that innovation is of key importance for the survival of an organisation (Eveleens, 2010). When the environment changes (e.g.. 16.

(17) changing consumer needs, changing regulation) organisations are often not able to adapt. (Leonard-Barton, 1992). This implies the urgency of innovation within an organisation. But what exactly is innovation? The term ‘innovation’ is used in many different ways and in many different disciplines, e.g. economics, entrepreneurship, business and management, technology, science and engineering (Baregheh, Rowley, & Sambrook, 2009). Baragheh et al (2009) analysed the usage of the term ‘innovation’ in the various contexts and derived a definition that may be applicable in business organizations and environments: ‘Innovation is the multi-stage process whereby organizations transform ideas into new/improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace’ (Baregheh, Rowley, & Sambrook, 2009). This definition seems applicable as it regards innovation as a (multi-stage) process, it focuses on organizations that transform ideas into new, improved or changed products. Furthermore the definition refers to “successfully advancing” and “competing and differentiating” to reflect both the overall strategic aim of innovation and the potentially diverse social and environmental contexts in which innovation occurs (Baregheh, Rowley, & Sambrook, 2009). Nonetheless, this definition misses some important aspects, such as the aspect of setting a new standard in the market: the aspect of disruption. It also misses the economic aspect, which means that innovation should be able to create cash flows. Besides, there are various forms of innovation: Conceptual innovation is, for example, something else than innovating production technology. In some literature, however, the aspect of disruption has been included in their definition of innovation: According to Huff et al (2013 ) innovation can be defined as ‘translating an invention into something that people will pay for – it brings something new to the market. Bergschöld & Källgren (2014) state that innovation is not just a new idea or a research result, it is actually taking this new solution to the market. Another example comes from Amabile (1996), who argues that innovation is the successful implementation of creative ideas within an organization. Thus, in addition to the definition of Baragheh et al (2009), the aspects ‘marketable’, ‘implementable’ and ‘disrupting’ should be taken into account when one speaks about innovation.. 17.

(18) The current research focuses on these ‘disruptive’ innovations, in particular on disruptive business model innovation. In his book ‘Exponential Organizations’ Ismail (2014) elaborates on this exponential ‘disruptive’ change. He states that that change is today’s only constant factor and that the magnitude of disruption is now becoming obvious. Organizations that don’t adjust to the changing environment will be left on the ash heap of history (like Kodak, Polaroid, Nokia). The vision of Ismail is that organizations need a radically new vision which is technologically smart, adaptive and encompassing. Organizations should be as quick, adept and innovative as the people who will be part of it. Ismail expects to see an explosion in the rate of innovativeness. The reason for this is that millions of new innovators now begin to experiment and upload their products and services and that they will be launching new businesses. ‘The rate of innovation has been fast in recent years, but this is only the beginning’ (Ismail, 2014). New types of customers and new markets require a different combination of tailored activities. For example, the value chain, internal processes, structures, and the culture that Uber needs in order to compete successfully in the taxi industry is different to what is currently applied by the existing taxi firms (Markides, 2006).. Another important aspect of innovation is the shaping (process) of the innovation. Christensen (2013) states that new technologies or product ideas go through a process of becoming fleshed out and shaped into a strategic plan in order to win funding. The shaping process must be consciously managed, and should not be left in an autopilot mode (Christensen C. M., 2013). Some support mechanisms are fine but this presupposes that ideas are generated from the same place and from the same people. According to Eccles et al (2014), ‘the thing about ideas is that they are nebulous and can spring up anywhere so having selected people in an ivory tower doesn’t really work. As a result, you have to flexibly tap into wherever the innovation is happening’ (Eccles, Narayandas, & Rossano, 2014). In this era of technological breakthroughs and innovative disruptions, it is important to touch upon the creativity of the younger generations, as ‘creativity is the seed of all innovation and psychological perceptions of innovation within an organization are likely to impact the motivation to generate new ideas’ (Amabile, Conti, Coon, Lazenby, & Herron, 1996).. 18.

(19) But why is innovation within the management consulting industry so important? Management consultants should serve the society by advising clients about the latest managerial breakthroughs in terms of shifting the boundaries of production functions, creating organizations and processes with higher efficiencies as it is, for example, done by IBM, Procter & Gamble and guide them through this process. Copying successful formulas from other clients, like the Boston Consulting Group used to do, is no longer a guarantee of success. And even though the time that partners could think of new products from their ivory towers lies behind us, knowledge spill-over will remain one of the key characteristics of a management consultant.. 2.2 Economic awareness In contrast to the concept of innovation in general, limited research is available on the link between someone’s awareness of the role of a consultant in the economy and their innovative behaviour. A good starting point would be to elaborate on the concept of intrinsic motivation, because one would expect that there is a link between intrinsic motivation and someone’s awareness of the role of the consultant in the economy. In order to touch upon the creativity of young professionals, they need to be motivated. This motivation can occur because people are simply self-motivated, but even when the motivation to generate and pursue new ideas is intrinsic, extrinsic rewards – including financial compensation, recognition, and access to new opportunities – can help (Andrew & Sirkin, 2008). Fortunately, many people are selfmotivated to do so; ‘they have a natural desire to do something that hasn’t been done before or to answer a question that intrigues them. But many people need a nudge’ (Andrew & Sirkin, 2008). Only a sufficiently motivated person will have the energy and commitment to press forward when facing obstruction. But what does self-motivation, or intrinsic motivation actually mean? Intrinsic motivation has been defined as ‘the doing of an activity for its inherent satisfactions rather than for some separable consequence and it refers to doing something because it is inherently interesting or enjoyable’ (Ryan & Deci, 2000). It exists in the nexus between a person and a task; whilst some authors defined intrinsic motivation in terms of the task being interesting, others defined it in terms of the satisfactions a person gains from intrinsically motivated task engagement (Ryan & Deci, 2000). 19.

(20) Theory states that intrinsically motivated people are often more creative and creative people are more innovative again. For example, Amabile et al. (1996) state that ‘new ideas are triggered through the creativity of consultants and people will be most creative when they are primarily intrinsically motivated, by the interest, enjoyment, satisfaction and challenge of the work itself’. Frey, Lüthje & Haag (2011) have a similar point of view: ‘The major source of intrinsic motivation is the sheer and fun and enjoyment of developing innovative solutions to challenging problems’. This aforementioned literature tells us that intrinsically motivated employees are more motivated in showing innovative behaviour, but it does not say anything about whether being aware of the role of the consultant in the economy can be seen as a form of intrinsic motivation. However, it seems likely that when a consultant is aware of his or her responsibility towards the economy, this might lead to higher levels of creativity and eventually innovative behaviour. Consultants are being paid by their clients. It is therefore attractive for consultants just to deliver what these clients are asking for. In this way, the consultant loses the macro-economic responsibility and will give insufficient attention to innovation, as this is often not the first priority of clients. This is why we need intrinsically motivated individuals, who have a focus on the economy rather than solely on the client’s requests. Edmund Phelps (2013) discusses the advantages and importance of focusing on the macro economy. In his book ‘Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge and Change’, Phelps (2013) states that home-grown innovations helped to create jobs, dynamism and vitality in the US economy, and eventually became the main source for the nation’s prosperity and inequality. The sudden economic progress, dynamism and mass innovations were the outcome of the ‘modern economy’. By this, Phelps refers to an economy with a considerable degree of dynamism, which comprises, the will, capacity and aspiration to innovate. ‘Economic dynamism’ to Phelps consists of deep-set forces and facilities which in return trigger innovation: “Business people draw on their personal observation and private knowledge, in combination with the shared pool of public knowledge (such as economics), in coming up with conceptualizations that lead to a new method or product that might work” (Phelps p. 30). ‘This dynamism, 20.

(21) according to Phelps, is manifested in grassroots innovation, where individuals are free and able to propose, test, and exploit new ideas and new ways of doing and being’ (Sheikh, 2014). It is, however, the responsibility of management for creating an environment where these kind of ideas can flourish. Whilst there is a clear link between intrinsic motivation, creativity, innovation and prosperity, there is, as mentioned above, limited known about the relationship or the link between economic awareness and innovative behaviour. Based on the above, one may assume the following hypothesis: Hypothesis 1: A higher level of awareness of the role of consultants in the economy will have a positive impact on the innovative behaviour of the young professional. 2.3 Experienced complexity leadership As Taminiau et al. (2009) warn, ‘management should be aware of the barrier which exists between coming up with a good idea and the possibility of working it out’. They continue by stating that the codification of knowledge can be a problem for consultancy, since it takes a lot of time and consultants are encouraged to assign their hours to specific projects. Their research shows that a total of 88 percent of the respondents (of 20 consultants) indicated that it would be possible to come up with creative ideas. However, there seems to be a barrier to working out the idea in a more concrete form: A total of 76 percent of the 20 consultants indicated that there would not be sufficient time and space to work out the ideas within the boundaries of the firm (Taminiau, Smit, & de Lange, 2009). The lack of time to share and work out new ideas during the working hours leaves the consultant no alternative but to develop new ideas in his own free time (Taminiau, Smit, & de Lange, 2009). Leadership might play an important role in this context, as it needs to facilitate innovative behaviour under young professionals: Roos Lindgreen en Fijneman (2014) state that with a CEO who emphasizes that innovation is an important topic, who includes innovation in the company strategy, initiates programs, puts people on certain positions and supports them, breaks down walls, celebrates successes as well as failures and shows his appreciation, firms are already half way down the road. Besides, ‘it is important that 21.

(22) innovation is a part of the strategy and that there is a shared vision on the importance of innovation for growth and competitive advantage’ (Roos Lindgreen & Fijneman, 2014). An open, creative and entrepreneurial internal environment, where involvement in new product development is encouraged and where senior managers play an important entrepreneurial role is expected to lead to successful innovation (de Bretani, 2001). The leader should play the role of a facilitator as well as a role in which he/ she can learn from others. A lack of management support for innovative ideas developed by consultants will probably be a barrier to innovation and will also have an impact on the organizational culture (Taminiau, Smit, & de Lange, 2009).. A slightly different view is described in the Complexity Leadership Theory (CL). Complexity leadership is enabling leadership creating conditions in which localized instances of adaptive behaviour of members of the organization can emerge and adapt to (sudden, unexpected, deep) changes (threats, conditions, opportunities) as needed to accomplish the mission of the firm or institution whilst preserving its identity, values and integrity. Complexity leadership questions (transformational) leadership (theory) because the latter assumes top-down planning and coordination (by the/one leader only) to survive (Pfeffer & Salancik, 1978). Complexity leadership is better suited for dealing with the knowledge-based complex organizations and environments (Marion, 2008). Richard Osborn (2008) sees complexity leadership as part of a new revolution. He sees a much more sophisticated, realistic, rich, comprehensive and holistic view of leadership emerging, which fits to the new information age. The old paradigms of industrialism are less relevant for the information-rich, innovation-dominated, global-networked entities of the current century (Osborn, 2008). The book states that complexity leadership seems particularly helpful in understanding the most difficult attributes of our new era – innovation, adaptation, learning, experimentation, and change. According to CLT, the emergence of innovations as a result of the interactions within an organization cannot be predicted, steered or managed, but still leadership may play an enabling role by stimulating interactions or inserting adaptive tension (Scholten, Keskitalo, & Meijerink, 2015).. 22.

(23) Tamianiau et al. (2009) argues that the impact of leadership on the innovative capability of a consultancy firm is also an interesting avenue for more research. Given the hierarchic structure of the organization of PwC, but also given the fact that PwC is a knowledge-intensive firm acting in the new information age, the expectation is that complexity leadership at PwC does play an important role for stimulating innovative behaviour at young professionals. It is likely that open supervisory interactions and perceived supervisory support operate on creativity largely through the same mechanisms that are associated with fair, supportive evaluation; ‘under these circumstances, people are less likely to experience the fear of negative criticism that can undermine the intrinsic motivation necessary for creativity’ (Amabile, Conti, Coon, Lazenby, & Herron, 1996).. The second hypothesis can therefore be defined as follows: Hypothesis 2: A higher level of experienced complexity leadership will have a positive impact on the innovative behaviour of the young professional. 2.4 Monetary incentives Monetary incentives could have an impact on the level of innovative behaviour as well. Merchant & Van der Stede (2007) state that rewards are an important form of motivation. According to them, ‘monetary incentives as reward is certainly not the only form of reward, and it is not necessarily always the best one, but its use is very common’. They classify monetary reward systems into three main categories: performance-based salary increases, short-term incentive plans (like bonuses, commissions and piece-rate payments), and long-term incentive plans (such as company shares or stock appreciation plans) (Merchant & Van der Stede, 2007). This research focuses on the first two forms of monetary incentives, because longterm incentives are more common in higher levels of management and because at PwC shares as a form of reward are not provided to junior employees. One of the goals of this research is to assess whether providing bonuses or salary increases to young employees will have a positive impact on the level of innovative behaviour shown by the young 23.

(24) professional. The literature highlights both positive as well as negative sides of monetary incentives as a way to trigger innovative behaviour. The number and variety of incentive-type pay plans available and in use today seem to indicate strongly that pay is a crucial variable in motivating people to greater productivity (Shapiro, 1978). However, Frey, Lüthje & Haag (2011) state that an individual who is clearly extrinsically motivated and perceives virtually no enjoyment from contributing, this person will concentrate on optimizing the benefit-cost-relationship of contributing by making numerous non-substantial contributions. Also, extrinsically motivated people do not engage in an activity because of pleasure, rather they expect some kind of reward that is external to the activity itself (Vallerand, 2004). A more neutral view comes from Shapiro (1978) in his vision of pay as a motivator: ‘Pay as a motivator would vary from situation to situation but should be ranked relatively high in importance’ (Shapiro, 1978). Merchant & Van der Stede (2007) state that some employees need incentives to exert the extra effort required to perform tasks well: i.e. to work hard, do a good job, and succeed. Employees need to be creative, which can be enhanced by expecting a reward that is perceived as a ‘bonus’, a confirmation of one’s competence, or a means of enabling one to do better, more interesting work in the future (Amabile, Conti, Coon, Lazenby, & Herron, 1996). In their ‘open innovation’ research, Frey, Lüthje & Haag (2011) identified three dominating factors with respect to extrinsic motives: career concerns, payment and personal need for innovations. Assuming that these are important factors for YoungPwC employees as well, the following hypothesis can be created: Hypothesis 3: Providing relevant monetary incentives to young professionals will have a positive impact on the innovative behaviour of the young professional. 2.5 Ambition and personal drive Anand et al. (2007) demonstrate that individuals’ ambitions to progress in their careers activate the process of new practice area creation. The assumption therefore is that ambition is positively related to innovative behaviour. Anand, Garnder & Morris (2007) talk about ‘socialized agency’. They refer to the process where an individual contributes to a higher goal, but from an individual perspective. These consultants take actions 24.

(25) that align their career moves with their firms' growth objectives and promotion requirement policies. This research sees socialized agency as a form of a consultant's desire to progress on the path towards partnership which is a crucial element in constituting a practice. It would be interesting to find out whether this desire to get internally promoted is the strongest aspect for showing innovative behaviour. Burgelman (1983) states that some individuals take a chance on championing new internal corporate ventures to gain visibility with senior management. On the other hand, Pascale & Sternin (2005) mention that somehow a few isolated groups and individuals might try to change the status quo, simply because they are not satisfied the way things currently go and that sometimes management is not even aware of this. Obviously a different perspective that Anand et al. (2007) apply. But how does a person’s drive or ambition relate to the three aspects that are described before (economic awareness, complexity leadership and monetary incentives)? Can the direct effect of these aspects be explained by the levels of ambition of an individual? Given the theory about ‘socialized agency’ as described above (Anand, Gardner, & Morris, 2007), one would expect that young professionals will get more ambitious when they learn about the requirements for advancing their career. This means that becoming more economically aware, receiving more monetary incentives, or experiencing a higher level of complexity leadership, the young professional would show higher levels of ambition and would therefore also demonstrate higher levels of innovative behaviour. The consequent hypotheses are: Hypothesis 4: The positive impact of the economic awareness of the role of consultants in the economy on his or her innovative behaviour is mediated by someone’s ambition. Specifically, of the economic awareness is expected to positively affect young professional’s ambition and in turn stimulate innovative behaviour.. 25.

(26) Hypothesis 5: The positive impact of experienced complexity leadership on his or her innovative behaviour is mediated by their ambition. Specifically, inspirational leadership is expected to positively affect young professional’s ambition and in turn stimulate innovative behaviour.. Hypothesis 6: The positive impact of relevant monetary incentives on the innovative behaviour of a young professional is mediated by their ambition. Specifically monetary incentives are expected to positively affect young professional’s ambition and in turn stimulate innovative behaviour.. 2.6 Conceptual Model The model below summarizes the hypotheses as stated above and shows the relationships between the variables. This model will be statistically tested in the next chapters.. Fig. 1: The Conceptual Model. 26.

(27) 2.7 Summary of the hypotheses The table below provides an overview of the hypotheses as described above.. Table 1: Overview of the hypotheses. 27.

(28) 3. Methodology The previous chapter provided some theoretical background as well as a presentation of the hypotheses that are tested in this research. In the current chapter, the measurement protocols will be explained. This includes the selection of the sample, creation of the survey, defining the measurements and assessing the reliability of the survey.. 3.1 Participants The intention of this research is to find out what drives innovative behaviour under young (management) consultants at PwC. The population of this research can therefore be seen as all young (management) consultants at PwC. All YoungPwC members are invited to participate in the study (no sampling took place). The reason for focusing exclusively on this group of employees is that young people in the organization are the main catalyst for change. They usually have a high energy level, are passionate, do not need to defend vested interests and are good in working together. Besides, they naturally rebel against the status quo (Roos Lindgreen & Fijneman, 2014). At PwC, employees are automatically a member of YoungPwC up to the level of manager, or up to the age of 35 when the level of manager has been reached before reaching the age of 35. An extract from the database containing the contact details of the sample is available for this research but cannot be shared due to privacy reasons. As the list is subject to changes due to company leavers and new joiners, the most recent available list will be used for this research (November 2015). The questionnaire was sent to all members of this group, regardless of the Line of Service (LoS) the employees work for. This means that professionals working for either Advisory, Tax, Assurance or Firm Services were all invited to complete the online survey and no probability sampling was applied in order to maximize the response. A total of 2.779 PwC employees were requested to participate in the research. These employees are divided over the four lines of service as described above. Whereas all employees in the first three lines of service are engaged in billable client work, those from the latter line of service are mainly internally oriented and are supportive to the organization (HR, Finance, Facility services, etc.). 28.

(29) The group of YoungPwC employees is a large and representative group of highly educated young professionals. They have diverse backgrounds, including economists, auditors, psychologists, MBA’s, tax experts and so forth, which makes the outcome of the research generalizable to a larger population.. 3.2 Procedure The research was performed by using a survey. The PwC Innovation program, Mindscape, helped in setting up and sending out this survey. The survey was created in English to increase the number of respondents by enabling the international staff to complete the survey as well. Likert scales have been used to smoothen the process of filling in the survey and to shorten the required time for completion. All participants received an e-mail, explaining the purpose of the research and the importance of their participation. A short introduction to the topic was given, explaining the trends of the changing environment and the effect on the clients of PwC. A link was enclosed in the email, leading the participants to an online questionnaire (Qualtrics). The questionnaire used consists of six sections, whereby every section focuses on one of the items as discussed in the conceptual model (figure 1). Each part was preceded by a short introduction.. 3.3 Sources To make the process of filling the questionnaire as smooth as possible, (7-point) Likert scales were used. The created questionnaire assesses the various variables as introduced in the previous chapter. The questionnaire has been composed from various sources. From these sources, only those questions relevant for answering the research question were included into the questionnaire. Some questions were slightly adapted so that they would fit better into this research. Some questions still needed to be translated from Dutch into English, using the translate/retranslate technique.. 3.4 Measures The variables needed to be constructed so that they could be measured through the use of a survey. This section explains the various parts of the survey and a thorough description of the chosen measurement techniques will be given.. 29.

(30) General questions (7 items) The survey opened with a number of general questions, meant to get insight in the background of the participant of the survey. No source was used for creating these questions. Age was measured on a one-item self-report measure consisting of 6 categories (1=under 20, 2=20-25, 3=2630, 4=31-35, 5=36-40, 6=41 or over). Gender was measured using a one-item self-report measure. There were two categories (1=male, 2=female). Job level was measured using a one-item self-report measure using 7 categories (1=Analyst/Junior Consultant, 2=Associate/Consultant, 3=Senior Associate/Senior Consultant, 4=Assistant Manager/Senior Consultant IV or V, 5=Manager, 6=Senior Manager, 7=other). Line of Service was measured using a one-item self-report measure using 4 categories (1=Assurance, 2=Tax&HRS, 3=Advisory, 4=Firm Services). Number of years working for PwC was measured using a one-item selfreport measure using 6 categories (1=Less than 1 year, 2=Between 1 and 3 years, 3=Between 3 and 5 years, 4=Between 5 and 7 years, 5=Between 7 and 9 years, 6=9 years or more). Familiarity with the PwC innovation program (Mindscape) was measured through a one-item self-report measure using 2 categories (1=Yes ,2=No). Entrepreneurial experience was measured through a one-item self-report measure using 2 categories (1=No, 2=Yes, please describe).. Innovative behaviour (10 items) The dependent variable ‘Innovative Behaviour under young Management Consultants producing Cash Flow’ indicates the level of innovative behaviour of young management consultants. 9 items were used to measure ‘innovative behaviour’ on a seven-point scale (1=strongly disagree, 7= strongly agree). One of the questions was measured on a five-point scale (1=not creative at all, 5=highest level of creativity). Scale means were calculated to create a scale score. The questions on this variable were drawn from two different sources which measured the concept of innovative behaviour under young professionals within a professional services firm (Ver Loren van Themaat, 2013) and a multi-dimensional construct of individual innovation (Kleysen, 2000). The ten items consisted of the following: (1) How creative do you think you are compared to your colleagues with similar positions within PwC? In my current job, I often… (2) Look for opportunities to improve an existing process, technology, product, service or work relationship, (3) Suggest 30.

(31) new ways to execute tasks, (4) Generate ideas or solutions that would improve the client or PwC's way of working, (5) Experiment with new ideas and solutions, (6) Test-out ideas or solutions to address unmet needs, (7) Evaluate the strengths and weaknesses of new ideas, (8) Try to persuade others of the importance of a new idea or solution, (9) Push ideas forward so that they have a chance to become implemented, (10) Incorporate innovative ideas for improving an existing process, technology, product or service into daily routines. The questions have partly been adjusted to make them suitable for the specific research. Question 1 was measured on a 5-point Likert scale, whereas the original question was measured on a 7-point Likert scale. The remaining questions were measured on a 7-point Likert scale instead of a 6-point Likert scale in the original survey. Question 4 was made specifically for PwC. Economic Awareness (8 items) The independent variable ‘Awareness of the role of the consultant in the economy’ deals with the question whether YoungPwC employees are aware of their role as a consultant in the economy and whether this could have been a main reason to join PwC. Eight items were used to measure to measure ‘economic awareness’ on an eight-point like scale (1= strongly disagree, 7= strongly agree, 8= not applicable). Scale means were created to create a scale score. The questions for measuring this variable were obtained from Prof. Dr. J. Strikwerda CMC via e-mail as operationalization of the theories of Phelps, Christensen and Martin (Martin, 2007). The eight items consisted of the following: (1) I get inspired about innovation primarily through economic literature, (2) I get ideas for innovation exclusively from questions and problems of clients, (3) In my opinion, innovations are necessary to respond to the changing economy, (4) In my opinion, Innovations only make sense when they are accepted by clients, (5) To get ideas for innovations, I read management books, (6) To get ideas for innovations, I read books about the economy, technology, etc. not specific being management books, (7) I see innovations within management consulting as more intelligent solutions to existing problems, (8) I see innovations within management consulting as the translation of deeper insights from the economy into new practices.. 31.

(32) Monetary Incentives (4 items) This independent variable assesses the impact of monetary incentives on the innovative behaviour of young professionals. Four items were used to measure ‘monetary incentives’ on a seven-point likert scale (1=strongly disagree, 7= strongly agree). Scale means were created to create a scale score. The questions for measuring this variable were obtained from R. Ver Loren van Themaat (2013): (1) Rewards would motivate me to think of more new and useful innovative ideas, (2) I would send in more suggestions and ideas if they would be rewarded, (3) The reward would be the most important motivator for me to partake in creativity/ idea sharing, and (4) If I would receive rewards for being actively involved with creativity/idea sharing I would spend more time thinking of new and useful ideas for PwC. No adjustments to these questions have been made.. Complexity Leadership (16 items) The independent variable ‘experienced complexity leadership’ indicates whether having an inspiring complexity leader that has a focus on innovation and renewal and embraces innovative behaviour of young professionals has an effect on the level of innovative behaviour shown by young management consultants. This is measured through 16 items on a seven-point Likert scale (1=strongly disagree, 7= strongly agree). Again, scale means were created to create a scale score. The source for these questions is Jeroen de Jong (2007) and the survey database ‘Question Pro’ (Senior Management Evaluation, 2015). The following questions were used: (1) Senior Management gives team members a clear picture of the direction PwC is heading, (2) Senior management seems willing to accept mistakes made in the process of trying new things, (3) My partner/director is experimenting with new ways of doing things, (4) My partner/director suggests new methods, techniques and tools, (5) My partner/director challenges me to look at things in a different way, (6) My partner/director has a vision on the value of innovation within PwC, (7) My partner/director trusts in my ability to contribute to innovation, (8) My partner/director is someone I can rely on, even if something turns out to be less successful, (9) My partner/director gives advice on the way something new can best be implemented, (10) My partner/director verifies whether our clients need new products or services, (11) My partner/director praises me for my innovative efforts, (12) My partner/director sets 32.

(33) innovation efforts of employees as an example for other colleagues, (13) My partner/director gives me the time to work out ideas, (14) My partner/director gives me the opportunity to try out things, (15) My partner/director gives bonuses for contributions to innovation, (16) My partner/director considers my contributions to innovation when he decides upon my rewards. A few adjustments to these questions have been made to make them more suitable for the target group and the purpose of this research. This includes a translation of the questions from the article of De Jong (2007), using translate-retranslate techniques and applying a seven-point Likert scale instead of a five-point Likert scale. The adjustment made to the questions of the ‘Question Pro’ database involved applying a seven-point instead of a six-point Likert scale. Ambition (13 items) The mediator ‘Ambition & Personal Drive’ was considered as a mediating variable for achieving higher levels of innovative behaviour under young management consultants. It is measured through 13 items on a seven-point Likert scale (1=strongly disagree, 7=strongly agree) after which scale means were created. Questions were derived from G. Blau (1985): (1) I do my job because I find it interesting and it gives me satisfaction, (2) I want a career in (Management) Consulting, (3) I have very strong ties to my job, (4) I like to be absorbed into my job, (5) I am willing to put in extra effort into my job for PwC, (6) If I had all the money I needed, I would still work at PwC, (7) If I could do it all over, I would not choose PwC, (8) I would accept almost any job to stay at PwC, (9) I find that my personal values are similar to the values of PwC, (10) I am disappointed that I ever entered the (Management Consulting) profession, (11) PwC inspires me to perform as good as possible to the job, (12) I am glad that I chose PwC over other organizations, (13) I really care about the fate of PwC. The survey of Blau (1985) was related to the field of nursing, though, and has been adjusted to make it suitable for the management consulting industry. Furthermore, a seven-point Likert scale has been applied instead of a five-point Likert scale.. 33.

(34) Table 2: Summary of the scales and sources. 3.5 Reliability For measuring the reliability of the scales, Cronbach’s Alpha was measured for each variable. Cronbach’s coefficient Alpha remains the most widely used measure of scale reliability (Peterson, 1994). Although various sources differ about the minimally acceptable reliability, those of Nunnally (Nunnally, 1978) are most widely referenced. In 1967, he argued that the minimally acceptable reliability for preliminary research should be in the range of .5 to .6, whereas in 1978 he increased the recommended level to .7 (without explanation) (Peterson, 1994).. 34.

(35) Table 3: Cronbach’s Alpha and number of items per variable. Table 3 shows that, except the variable ‘economic awareness’, all values meet the criteria of a minimum value of 0,7 according to Nunnally (1978) and therefore show high levels of internal consistency. With regards to ‘economic awareness’, no items could be deleted to significantly increase the Cronbach’s alpha.. 35.

(36) 4. Results In this chapter, the collected data will be analysed before valid conclusions will be drawn in the next chapter. The results form the basis of the discussion and recommendations to PwC.. 4.1 Introduction This chapter describes the basic characteristics of the results. A comparison between the participants and the total target group is made in order to assess the validity of the data. The headcount of the group of YoungPwC members is 2.779 employees. In total, 376 respondents participated in the survey (response rate of 13,5%). This group of respondents was compared with the population in order to assess the validity of the responses. This is done based on age, gender, line of service and years of working experience at PwC. Job level was not compared as this information could not be derived from the file containing all the data of the target group. The main reason for this was that the file does not distinguish between Senior Consultant, Senior Consultant IV or V and Assistant Manager. From the total of 376 respondents, 324 respondents fully completed the survey (11,7% of the population). All incomplete surveys were excluded for the research through listwise exclusion.. 4.2 Descriptive statistics This paragraph will take a closer look at the control variables age, gender, job level, line of service and years of working experience. Figure 2 shows the distribution of age. The left figure shows the data of the sample, whereas the right figure illustrates the data of the population. The majority of the respondents is between 20 and 30 years old (82%), which is comparable with the age distribution of the population. The same counts for the other age categories.. 36.

(37) Figure 2: Distribution of the survey results by age. Figure 3 shows the distribution of the survey results by gender. On the left there is the sample, on the right the population. A slight majority of the respondents is male, in both the sample as well as the population group.. Figure 3: Distribution of the survey results by gender. Figure 4 shows the distribution of the survey results by job level. As mentioned previously, the data of the sample could not be compared with the data of the population. The majority of respondents had the job level of associate / consultant or senior associate / senior consultant (69%). These findings are in line with the findings related to age: in general, these job levels correspond with the age of the YoungPwC employee. It may therefore be assumed that the distribution of the population will be similar to the distribution of the sample. The category ‘other’ consists mainly of employees who are student or ‘practise support staff’: i.e.. 37.

(38) employees working for Firm Services. Common examples are trainees and interns, management assistants, IT developers, recruiters, etcetera.. Figure 4: Distribution of the survey results by job level. Figure 5 indicates the distribution of the results by Line of Service (sample is left, population is right). The Lines of service Assurance, Tax and Advisory are ‘Client support staff’, i.e. employees working on chargeable client assignments. The Firm Services category consists of ‘Practise support staff’, i.e. in supporting functions such as HR, IT, Finance, Internal Audit, Management Support etc. Compared to the population, there was a relatively large group of respondents from assurance who completed the questionnaire. The group of Advisory respondents was relatively smaller compared to the population. As these differences are not significantly large, it is not expected that they influence the results.. Figure 5: Distribution of the survey results by line of service. 38.

(39) Figure 6 illustrates the distribution of the results by years of working experience for PwC (left is the sample, right is the population). 65% of the respondents has been working for PwC for less than 4 years. 17% of the respondents has been working for PwC for longer than 5 years. There are no significant differences between the two groups.. Figure 6: Distribution of the survey results by years of working experience. For analysing the data, a few checks in the data were made. At first, the names of all the variables were adjusted into recognizable variable indicators. A frequency check shows that no uncommon data entries were identified. This is as expected because it was for the participants not possible to make adjustments to the survey and nearly all questions were to be filled in on a Likert scale. No corrections in the data were required. A number of counter indicative items were included in the survey. These items were re-coded in the dataset before any analyses were made. Scale means were created for hypothesis testing, by calculating the mean of the items of each variable. These scale means are used for further analyses and are presented in the table below. Descriptive statistics were calculated to get a first understanding of the survey results. All variables were measured on seven-point Likert scales, except ‘Economic Awareness’ (eight-point Likert scale). This latter variable also does not hit lower than 2,88, which might suggest a negative skewness. Scale mean scores are higher than the scale mean 39.

(40) for all variables. This implies that the respondents had the tendency to give rather positive answers (on average higher than the scale mean of 4,5 for the variable ‘Economic Awareness’ and higher than the scale mean of 4 for the other variables). Standard deviation scores are all below 1, except the variable ‘Monetary incentives’. This indicates low variance in the respondents’ answers. A quick evaluation of the skewness indicates that only the variable ‘Ambition’ tends to show a moderate negative skewness. Descriptive Statistics. Economic Awareness Inspirational Leadership Monetary incentives Ambition Innovative behaviour Valid N (listwise). N 332 327 344 350 344 327. Min 2,88 1,06 1,00 1,69 2,00. Max 7,50 7,00 7,00 6,77 6,80. Mean SD Skewness 4,6028 ,78260 ,399 4,3429 ,92360 -,392 4,3634 1,18106 -,301 5,0908 ,69681 -,937 4,7808 ,79189 -,025. Std. Error Kurtosis ,134 ,521 ,135 ,614 ,131 ,148 ,130 1,999 ,131 ,229. Std. Error ,267 ,269 ,262 ,260 ,262. Table 4: Descriptive statistics for averaged scales. 4.3 Correlation analysis A correlation matrix was created by using these scale means to get a better understanding of the relationship between the different variables.. * Correlation is significant at the 0,05 level (2-tailed) ** Correlation is significant at the 0,01 level (2-tailed) Table 5: Means, Standard Deviations and Correlations. The correlation matrix shows that the dependent variable ‘innovative behaviour’ has a significant relationship with both the independent variables (economic awareness, complexity leadership and monetary incentives) as well as with the mediator (ambition). Furthermore, there is a significant relationship between 40.

(41) the variables Complexity Leadership and Ambition (r=0,30) and between the variables Economic Awareness and Ambition (r=0,21).. 4.4 Regression analysis This section discusses the regression assumptions and the regression models. Based on these analyses, the hypotheses will be either accepted or rejected. The data set used for the analyses needs to meet certain assumptions in order to draw valid conclusions on the hypotheses. These assumptions will be assessed below. Sample size: Based on a population of 2.779 individuals, the optimal sample size is 338 participants, using a 95% confidence interval and a 5% margin of error (SurveyMonkey, 2015). As 376 individuals participated in the survey, the requirements regarding sample size have been met. Linearity: The relationship between the dependent and independent variables should be linear. This is assessed through the use of scatterplots. The result is that there is no reason to doubt this assumption. Also, a plot of residuals against the predictor variable supports the assumption of linearity. Independence: This assumption means that all values of the outcome should come from a different person: successive residuals should be independent and should not be highly correlated. Plotting the data against the predictor variable shows that there is no indication of autocorrelation. This means that the data is good (obviously, Qualtrics has built in measures for preventing participants to take the survey more than once). Homoscedasticity: This means that the variance around the regression line is the same for all values of the dependent/independent variables. This is also known as homogeneity of variance and it is assessed through the plot of residuals against the predictor variable as well. There is no reason to doubt this assumption. Multicollinearity: The independent variables must not be highly correlated. When the predictors are highly correlated, it is more difficult to assess the importance of a single predictor. A correlation matrix was used to assess the correlations between the variables. No high correlation coefficients between variables were. 41.

(42) identified (higher than 0,90). A second analysis using the variance inflation (VIF) factor did not indicate that predictor variables were dependent. Normally-distributed errors: The residuals in the model were found to be random normally distributed variables with a mean of zero. This was assessed through the use of a P-P plot and a histogram. Given the results of the assumption tests above, it may be concluded that this is a legitimate regression.. 4.5 Regression Models For testing the hypotheses, a mediating analysis was performed, testing whether the size of the effect of an independent variable on a dependent variable interact with a mediator. This was done three times, using the SPSS process macro, written by Andrew F. Hayes (Model 4). The first analysis assesses whether the effect of economic awareness on innovative behaviour is mediated by ambition, when controlling for the variables ‘complexity leadership’ and ‘monetary incentives’. Secondly, the same analysis was performed for the variable ‘ complexity leadership’, when controlling for ‘economic awareness’ and ‘monetary incentives’. Finally, the analysis was performed for the variable ‘monetary incentives’, when controlling for ‘economic awareness’ and ‘complexity leadership’. The findings of these analyses are summarized in the table below.. Consequent Antecedent X1 (AWA_TOT) X2 (LEAD_TOT) X3 (REW_TOT) M (AMB_TOT) constant. a a a. M (AMB_TOT) Coeff. SE p 0.202 0.046 <.001 0.231 0.039 <.001 -0.05 0.030 >.005. c’ c’ c’. Y (INNO_TOT) Coeff. SE p 0.172 0.055 <.005 0.186 0.047 <.005 0.116 0.035 <.005. i1. --3.376. b i2. 0.064 2.404. ----0.290 <.001 R 2 = .142 F (3,323) = 17.863, p <.001. 0.064 >.005 0.400 <.001 R 2 = .124 F (4,322) = 63.563, p <.001. Table 6: Summarized mediation analysis. 4.6 The effect of economic awareness on innovative behaviour (H1 & H4) The indirect effect of 0.013 means that two employees who differ by one unit in their reported economic awareness (AWA_TOT) are estimated to differ by 0.013 units in their reported innovative behaviour as a 42.

(43) result of the tendency that young professionals who are more aware of their role as a consultant within the economy appear to be more ambitious, which translates into a higher degree of innovative behaviour. This indirect effect is not statistically different from zero, as revealed by a 95% BC bootstrap confidence interval that is not entirely above zero (-0.016 to 0.042).. The direct effect of economic awareness (AWA_TOT), c′ = .172, is the estimated difference in innovative behaviour between two young professionals experiencing the same level of ambition but who differ by one unit in their reported economic awareness (AWA_TOT), meaning that a person who is more aware of his/her role as a consultant within the economy, but who is equally ambitious is estimated to be 0.172 units higher in his/her reported innovative behaviour. This direct effect is statistically different from zero, t= 3.134, p = .002, with a 95% confidence interval from 0.064 to 0.280.. The total effect of economic awareness (AWA_TOT) on innovative behaviour is c = .185, meaning two young professionals who differ by one unit in AWA_TOT are estimated to differ by 0.185 units in their reported innovative behaviour. The positive sign means that the person who is more aware of his/her role as a consultant within the economy reports higher levels of innovative behaviour. This effect is statistically different from zero, t = 3.473, p < .001, or between 0.080 and 0.289 with 95% confidence.. 4.7 The effect of leadership on innovative behaviour (H2 & H5) The indirect effect of 0.015 means that two employees who differ by one unit in their reported experienced complexity leadership (LEAD_TOT) are estimated to differ by 0.015 units in their reported innovative behaviour as a result of the tendency that young professionals who experience more complexity leadership appear to be more ambitious, which translates into a higher degree of innovative behaviour. This indirect effect is not statistically different from zero, as revealed by a 95% BC bootstrap confidence interval that is not entirely above zero (-0.196 to 0.045).. 43.

No results found