Optimizing organizational learning by leveraging the
power of inclusion in functional diverse teams
Diversity is being invited to the party, inclusion is being asked to dance
MSc Business Administration
Specialization: Leadership and Management Master Thesis Final
Marinka Bos | 10486771
Primary Supervisor: R. E. van Geffen, MSc Secondary Supervisor: S.T. Mol, MSc
Statement of Originality
This document is written by Marinka Bos, 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.
Abstract
The present study responds to the urgent need for organizations to be more flexible, adaptive, entrepreneurial, and innovative in meeting the changing demands of today’s turbulent business environment. Especially due to the fact that organizations increasingly turn towards the use of cross-functional and multi-disciplinary teams, benefitting from diversity while optimizing organizational learning processes becomes a key strategic driver for organizations. Appropriate leadership to facilitate this is required; however, there have been little empirical analyses of the theoretical relationships among the key components that make up organizational learning, including exploration, and exploitation, combined with inclusive leadership. This study examines these linkages in terms of their relationships within 61 teams in the Netherlands, while taking both functional diversity and psychological empowerment of employees into account. Hierarchical regression modelling based on responses to a survey of 223 managers and employees, showed that inclusive leadership indirectly increases both exploratory and exploitative innovation through psychological empowerment. Inclusive leadership also directly optimizes exploitative innovation. Functional diversity did not moderate the relationships. Strategies for building innovative organizations are discussed.
Keywords: Inclusive leadership, exploratory innovation, exploitative innovation,
Table of Contents
INDEX OF FIGURES AND TABLES………5
INDEX OF APPENDICES………...5
INTRODUCTION……….6
THEORETICAL BACKGROUND………..10
• Leader inclusiveness: leadership of the future………..10
• Organizational learning: balancing exploratory and exploitative innovation...12
• Inclusive leadership and exploratory innovation………..13
• Inclusive leadership and exploitative innovation……….16
• The moderating role of functional diversity……….18
• The mediating role of psychological empowerment……….22
METHODS………..26
• SAMPLE AND PROCEDURES………..26
• MEASURES…….………29
• DATA ANALYSIS………..31
RESULTS………33
DISCUSSION AND CONCLUSION………40
• DISCUSSION………...40
• RESEARCH CONTRIBUTIONS………45
• PRACTICAL IMPLICATIONS………...47
• LIMITATIONS AND FUTURE RESEARCH OPPORTUNITIES………….50
• CONCLUSION……….54
REFERENCES…….……….………..56
APPENDIX A SURVEY INSTRUCTIONS………...67
Index of Figures and Tables
Figure 1. Conceptual model of hypothesized relationships Table 1. Descriptive Statistics and Correlations
Table 2. Results of the Hierarchical Regression Analyses for Inclusive Leadership Explaining Exploratory Innovation
Table 3. Results of the Hierarchical Regression Analyses for Inclusive Leadership Explaining Exploitative Innovation
Table 4. Results of PROCESS analysis with independent variable exploration Table 5. Results of PROCESS analysis with independent variable exploration
Index of Appendices
Appendix A Survey Instructions Appendix B Survey Item Wordings
Introduction
The current competitive and dynamic business environment prompts the need for continuous learning as a key strategic driver of an organization’s ability to be and remain adaptive and flexible (Burke, 2006). Driven by the rapid speed of technological innovations, increased intercultural and multidisciplinary teamwork, as well as emerging transformations towards user-centeredness in organization design, organizational learning enables established firms to adapt to change. Ultimately, organizational learning has been proposed as one of the most, if not the only, important sources of sustainable competitive advantage (De Geus, 1988). However, organizational learning is hard to achieve, as organizations cannot learn directly from experience (March, 1991). Therefore, both researchers and practitioners need to understand the processes by which organizations learn, and how these processes might be better managed in increasing cross-functional work teams.
Due to the fact that organizations increasingly turn towards the use of cross-functional and multidisciplinary teams, as well as due to ever changing demographics across the workplace and the labour market (Knippenberg, De Dreu, & Homan, 2004), the management of a growing (functional) diverse talent pool becomes ever more central in organizations (Robinson & Dechant, 1997). Most notably, organizations that aim to optimize organizational learning, try to find ways to leverage from the wealth of knowledge, insights, and perspectives functional diversity brings (Jackson, 1992; Triandis, Kurowski, & Gelfand, 1994; Williams & O’Reilly, 1998). However, organizations continuously struggle in delineating the specific mechanisms through which functional diversity increases organizational effectiveness and learning (Keller, 2001; Thomas & Ely, 1996).
In order to effectively manage the challenges diversity brings, and to optimize organizational learning, organizations increasingly need leaders with a certain capacity of leader inclusiveness. Essentially, “Without inclusion, the crucial connections to truly attract
diverse talent, encourage their participation, foster innovation, and lead to business growth will not happen”, Vernã Myers - diversity advocate (Sherbin & Rashid, 2017, p.1). Inclusive leaders signal explicit acceptance of employees of various backgrounds through the establishment of high-quality relationships, and promote norms about equality and inclusion that will facilitate greater power sharing, and improve reciprocal exchanges among team members (Emerson, 1976; Hollander, 2012). As a result, inclusive leaders are considered particularly suitable in managing organizational learning processes, since their specific qualities create conditions that facilitate and foster organizational learning.
Especially in context of increased functional diversity in work teams, leader inclusiveness may become even more effective. Functional diversity provides a context where inclusive leaders in particular can thrive, to enable organizations to leverage from the great variety of perspectives. In addition, inclusive leaders may reinforce psychological empowerment among employees (Spreitzer, 1995). Prior research indicates that empowerment increases satisfaction, commitment and performance, and decreases job strain and turnover (Seibert, Wang & Courtright, 2011). These outcomes can be considered key factors promoting organizational learning, because for instance through increased satisfaction and commitment employees are more likely to contribute to a firm’s strategic goals in line with its specific innovation needs (Buller & McEvoy, 2012). Hence, both functional diversity and psychological empowerment are central in investigating the impact of inclusive leadership on organizational learning.
This study argues that inclusive leadership permits organizations to achieve a sustainable competitive advantage through optimizing organizational learning synergies, while leveraging from inclusion with regards to a diverse and empowered workforce in three ways. First of all, by including all team members in decision-making, inclusive leaders establish norms and values around equal treatment. This increases psychological
empowerment, which is positively related to innovation and creativity (De Dreu & West, 2001; Fiol, 1994). Valuing all team members and being open, accessible, and available, is the second way inclusive leaders optimize organizational learning. They create an open and trusting work environment with high quality relationships (Hollander, 2012), and improved reciprocal exchanges among team members. This encourages employees with various backgrounds to try out different approaches related to learning, which is beneficial for organizational learning processes (Amabile, Conti, Coon, Lazenby, & Herron, 1996; Gibson & Birkinshaw, 2004; Nemanich & Vera, 2009). Third, through creating a reputation for inclusiveness, inclusive leaders make their organization become a magnet attracting top diverse talent (Sparrow & Makram, 2015). In sum, the present study highlights the practical need to develop tools and practices that leaders can use to establish organizational flexibility and adaptability, through optimized multi-level organizational learning processes in a diverse work environment.
The purpose of this study is to provide a richer explanation, and empirical assessment that adds greater clarity on how inclusive leaders successfully contribute to optimized organizational learning (Nishii & Mayer, 2009). Since organizational learning implies a right balance between exploiting existing competences, and exploring new opportunities (Gibson & Birkinshaw, 2004; He & Wong, 2004; Jansen, Crossan, & Vera, 2009), inclusive leaders may play an important role in finding this balance. However, to date no study evaluated the influence of inclusive leadership on organizational learning, while taking into account both the moderating capacity of functional diversity, and the mediating capacity of psychological empowerment (Antonakis, Avolio, & Sivasubramaniam, 2003; Berson, Nemanich, Waldman, Galving, & Keller, 2006; Jansen, et al., 2009; Jaussi & Dionne, 2003, Mitchell, et al., 2015; Vera & Crossan, 2004). Though research connecting different leadership styles with organizational learning exists, most studies on exploration, innovation, and creativity imply
an indirect role for leaders (Jansen, et al., 2009; Vera & Crossan, 2004; Berson, et al., 2006). Also, research on exploitation in general is under-developed (Berson, et al., 2006; Hannah & Lester, 2009).
Drawing from theories of leadership (Den Hartog & Koopman, 2001), social exchange theory (Emerson, 1976), and organizational learning and innovation (Crossan, Lane, & White, 1999; Jansen, et al., 2009), this study contributes to existing literature by investigating the influence of the relative new concept of inclusive leadership on organizational learning. This leadership style is considered particularly adept at finding the right balance between exploiting institutionalized learning from the past, and exploring new learning for the future simultaneously. Yet, this study not only aims to add value by researching the direct and indirect relationships between inclusive leadership and organizational learning, it also aims to provide theoretical insights in how inclusive leaders contribute to establishing organizational innovation as a dynamic capability of the mutually reinforcing dimensions of organizational learning (March, 1991). Specifically, the research question central in this study is: To what extent does inclusive leadership optimize both organizational learning dimensions exploratory and exploitative innovation, while taking into account the moderating capacity of functional diversity and the mediating capacity of psychological empowerment in work teams?
The remainder of this research starts with an overview of the relevant literature as the basis for specifying four hypotheses. Then, the method is discussed, followed by a detailed outline of the analyses, after which the findings are further interpreted in the discussion section. Finally, the study’s theoretical and practical implications, as well as limitations and future research suggestions will be discussed.
Theoretical Background Leader inclusiveness: leadership of the future
In their review on leadership theory Den Hartog and Koopman (2001) address the changing nature of leadership in the future. They discuss a fundamental change in organizations regarding the increasing importance of teams, and the changing content of work from mainly physical to intellectual (Guzzo & Salas, 1995; Mohrman & Coben, 1995). Hence, in the flexible, boundaryless structures of future organizations, leaders can no longer rely on traditional hierarchy. The main reason for this, is because managing and coordinating efforts of employees has become more complex, making direct supervision through observation and controlling difficult to achieve (Den Hartog & Koopman, 2001; House, 1995). Consequently, these developments could lead to a less pronounced or at least fundamental different role for leaders in future organizations (Den Hartog & Koopman, 2001). In order to manage work teams effectively, leaders of today face challenges related to participation in decision-making, indirect supervision, and reward systems for intellectual work tasks that are in sharp contrast with traditional hierarchy, direct supervision, and rewards for physical work tasks in the past. Based on these challenges, inclusive leadership is proposed especially suitable in the changing structures of future organizations.
Although the concept of inclusion, and inclusive leadership, has been nascent in the organizational literature for the past decade, it has garnered increased attention in recent years (Shore et al., 2011). Nonetheless, inclusion remains a new concept without consensus on the nature of the construct or its theoretical foundations (Shore et al., 2011). A review of the literature on inclusive leadership unfolds a two-dimensional construct based on a combination of participative and relational leadership styles. Inclusive leadership is considered to be originated from both styles, and can be defined as specific leader behaviour that promotes the inclusion of all team members in discussions and decisions, in which their divergent
perspectives are explicitly valued and encouraged (Nembhard &Edmondson, 2006). In addition, inclusive leaders exhibit openness, accessibility, and availability in their interactions with followers (Carmeli, Reiter-Palmon & Ziv, 2010; Edmondson, 2003).
The leadership literature highlights several benefits of inclusive leadership such as enhanced psychological safety (e.g. Carmeli, et al., 2010; Hirak, Peng, Carmeli, Schaubroeck, 2012; Nembhard & Edmondson, 2006), team engagement (Nembhard & Edmondson, 2006), and team performance (Mitchell, et al., 2015), and reduced perceived status differences (Mitchell, et al., 2015; Nishii & Mayer, 2009), and turnover (Nishii & Mayer, 2009). While no study so far investigated the relationship between inclusive leadership and organizational learning, prior research shows that leaders may adopt generative thinking, and promote exploratory innovation through mobilizing commitment and effective communication (Jansen et al., 2009; Vera & Crossan, 2004). These studies also found that leaders who focus on maintaining the status quo, foster exploitative innovation as they explicitly reward and recognize the accomplishment of agreed-upon objectives (Amitay, Popper & Lipshitz, 2005; Jansen et al., 2009; Vera & Crossan, 2004).
Inclusive leadership differs from other leadership styles and their relatedness to organizational learning, as it focuses on a specific strategy of openness and accessibility that creates a dynamic which promotes the diversity of opinions in the context of collective team goals (Nembhard & Edmondson, 2006). In addition, inclusive leadership focuses on reducing power and/or status differences, which enhances organizational learning processes. They do this by increasing collaboration, which enhances knowledge sharing and collective learning (Nembhard & Edmondson, 2006). Hence, proven relationships between different leadership styles and organizational learning, and the assets in which these styles differ from inclusive leadership, show promising links between the disconnected fields of inclusive leadership and organizational learning in the current study (Berson, et al., 2006; Vera & Crossan, 2004).
Organizational learning: balancing exploratory and exploitative innovation
According to March (1991), both exploratory and exploitative innovation are involved in organizational learning. On the one hand, organizations can engage in exploratory
innovation in which they pursue new knowledge, and develop products and services for
emerging customers and markets (Jansen, Van den Bosch, & Volberda, 2006). This type of learning offers radical innovations such as new designs, new markets, and new channels of distribution (Abernathy & Clark, 1985; Jansen, et al., 2006). On the other hand, organizations can pursue exploitative innovation where they build on existing knowledge resources, and extend existing products and services for current markets (Benner & Tushman, 2003; Jansen, et al., 2006). This type of learning offers incremental innovations such as improving established designs, expanding existing products, and increasing the efficiency of existing distribution channels (Abernathy & Clark, 1985; Jansen et al., 2006). March (1991) notes that organizational success stems from having both learning synergies enabled by exploitation and exploration efforts simultaneously. Essentially, the two dimensions of organizational learning are mutually reinforcing, as innovation is a dynamic capability that demands attention to both existing knowledge and the creation of it (Andriopoulos & Lewis, 2009; Smith, Collins, & Clark, 2005).
In order to support exploration and exploitation at the same time, leaders need to manage a rich combination of multi-level learning processes that delineate the conflicting dynamics of organizational learning (Jansen, et al., 2006). In line with previous studies linking leadership with organizational learning (e.g. Amabile, Schatzel, Moneta, & Kramer, 2004; Cox & Blake, 1991; Smith & Tushman, 2005; Tushman & O’Reilly, 1996; Zaccaro, Rittman & Marks, 2001), the current study links inclusive leadership with organizational learning on the group, and organizational level. Multi-level learning processes either
institutionalized learning leading to exploitative innovation. This highlights the tension between both dimensions of organizational learning (Crossan & Berdrow, 2003). Exploration involves search, variation, risk-taking, and experimentation, while exploitation includes refinement, selection, efficiency, and execution (March, 1991). Inclusive leaders are considered crucial in managing this tension between organizational learning processes, as well as in optimizing organizational learning generally. This is, because they naturally create conditions that transfer the conflicting dynamics into reinforcing ones. As a result, impediment of successful innovative outcomes, or failure to achieve a sustainable competitive advantage is minimized.
Depending on the specific innovation needs of an organization, inclusive leaders will facilitate and optimize organizational learning in multiple ways. This is because, besides the fact that inclusive leadership may be able to transfer conflicting dynamics into reinforcing mechanisms of innovation, it also comprises behaviour that elicits both organizational learning dimensions simultaneously. Therefore, the basic logic of the present study, is that inclusive leaders can support exploration and exploitation by displaying behaviours that fosters on the one hand consistency, stability and control, and on the other hand passion, risk-taking, and creativity (Denison, Hooijberg, & Quinn, 1995; Gibson & Birkinshaw, 2004; Vera & Crossan, 2004). Since inclusive leaders focus on behaviours that acknowledge the value of diversity in other’s views, reduce status/power differences, and express openness and accessibility, they may be able to find the right balance in enhancing both exploratory and exploitative innovation.
Inclusive leadership and exploratory innovation
Exploratory innovation is intended to “respond to, as well as drive, latent environmental trends by creating innovative technologies and new markets”, (Lubatkin,
Simsek, Ling, & Veiga, 2006, p. 648). It emphasizes the search for new knowledge, invention of new products, and experimentation (Jansen, et al., 2006). Therefore, inclusive leaders are ideally suited to this dimension of organizational learning, because they value all unit members, are open and accessible, and actively ask for input in discussions and decision-making. Through this, inclusive leaders are able to foster processes that enhance risk-taking, and creative behaviour central to exploratory innovation. Inclusive leaders facilitate exploratory innovation in three ways, (1) through the establishment of high quality relationships (Brower, Schoorman, & Tan, 2000; Hollander, 2012), (2) by the creation of an open and trusting environment (Carmeli, et al., 2010), and (3) through improvements of reciprocal behaviour among team members (Hollander, 2012).
First, through the participative process between leader and employee high quality relationships develop, consisting of mutual trust and understanding facilitating different levels of learning (Brower, et al., 2000). Inclusive leaders create positive attributions towards the transfer of learning, and promote exploratory innovation through involving team members in decision-making and discussions that mobilize commitment to realize the potential of radical innovations (Vera & Crossan, 2004). Additionally, they encourage employees to participate in knowledge sharing, as well as link individual’s identities to the collective identity. As a result, the individual’s self-concept becomes engaged in the interest of the firm’s mission, and employees’ intrinsic motivation to engage in exploratory learning increases (Jung & Chow, 2003; Shamir, House, & Arthur, 1993). Furthermore, by promoting and exhibiting exploratory learning behaviours to the top management, inclusive leaders help these behaviours cascade to lower levels of management (Waldman & Yammarino, 1999). They do this by serving as role models. Additionally, by actively listening to employees, inclusive leaders encourage them to speak up, and share new and innovative ideas, which are central to exploratory innovation (Edmondson, 2003).
Secondly, the equal presence of team members’ opinions and viewpoints in decision-making processes, results in a supportive climate emphasizing the generation and diffusion of different ideas. This functions as a perfect base for the exploration of previously unknown products and markets central to exploratory innovation. Moreover, a supportive work environment where employees feel safe (Carmeli, et al., 2010) encourages them to take risks, make mistakes (without negative repercussions), think ‘out of the box’, look at problems from different angles, and feel more comfortable with the development of products outside the established company routines (Andrews & Smith, 1996; Carmeli, et al., 2010). This promotes creativity and increased exploratory thinking (Amabile et al., 1996; Sethi, Smith & Park, 2001; Sosik, Avolio, & Kahai, 1997). Especially in context of exploratory innovation, encouraging risk-taking and managing uncertainty is extremely relevant, because radical innovations incorporate greater technological uncertainty and complexity (March, 1991; Raz, Shenhar, & Dvir, 2002). Moreover, results cannot be easily predicted (Green, Gavin, & Alman-Smith, 1995; Rice, Peters & Colarelli O’Connor, 2001; O’Connor & McDermott, 2004). Thus, through establishing a supportive work environment, inclusive leaders encourage employees to explore new products and competences, as they increasingly dare to take the necessary risks.
Third, a combination of openness, accessibility, and availability with inclusion in decision-making, allows inclusive leaders to promote norms about equality and inclusion. These norms not only facilitate greater power sharing, common understanding, and idea sharing, but also improve reciprocal exchanges among team members, and of employees towards the leader (Hollander, 2012). According to Emerson (1976) social exchange theory claims that behaviour is a function of payoffs. In context of exploratory innovation, these payoffs are directed towards exploring new opportunities in a collective effort, aimed at optimizing organizational learning. In other words, inclusive leader behaviour creates
conditions such as equality of team members, and inclusion in decision-making that make followers reciprocate desired (learning) behaviour that is positive towards exploratory innovation (Carmeli et al., 2010; Jansen et al., 2009; Vera & Crossan, 2004). Reciprocal exchanges among group members further optimize exploration, as they foster interactions such as mutual trust, and collective sense making that are considered advantageous for exploring future products and markets (Hollander, 2012; Vera & Crossan, 2004). Moreover, reciprocal exchanges within teams positively influence interpersonal commitment, trust, fairness, procedural and distributive justice, coalition formation, and collective action (Cook, Cheshire, Rice & Nakagawa, 2013; Emerson, 1976). These outcomes can be positively connected to exploratory innovation facilitated by inclusive leaders. Taking these arguments into account, it can be expected that:
H1. Inclusive leadership is positively related to exploratory innovation.
Inclusive leadership and exploitative innovation
Contrary to exploratory innovation, exploitative innovation is intended to “respond to current environmental conditions by adapting existing technologies and further meeting the needs of existing customers”, (Lubatkin et al., 2006, p. 648). The main goal is increasing efficiency and proficiency through repetition, replication, and incremental improvements in established practices and products (March, 1991). While it can be assumed that inclusive leaders promote exploitative innovation in a similar vein as exploratory innovation (i.e. through high quality relationships, an open and trusting environment, improvements of reciprocal behaviour), it has to be noted that exploitative innovation differs from exploratory innovation in critical, and contrasting respects. A key difference is that exploitative innovation implies less risk-taking, and thus requires less tolerance for mistakes facilitated by inclusive leaders. Another key difference is that improving and adapting existing knowledge
demands less leader guidance, than the complex and uncertain generation of new knowledge (Vera & Crossan, 2004). Hence, leaders exhibiting high levels of inclusion are less strongly associated with facilitating incremental ideas of exploitative innovation, than with radical ideas of exploratory innovation (Jansen et al., 2009).
The contrasting differences between exploitative and exploratory innovation, as well as the apparent less strong association between inclusive leadership and exploitative innovation, refer to the need to manage both dimensions of organizational innovation in a balanced way. Since innovation demands attention to both existing knowledge, and the creation of it, inclusive leaders are required to establish the necessary mutually reinforcing synergy (Andriopoulos & Lewis, 2009; March, 1991; Smith et al., 2005). Managing this synergy effectively allows organizations to improve and leverage from experiences and knowledge gained in the past (i.e. exploitation), as well as to explore and seek new opportunities to remain competitive or even to be a market leader in the future (i.e. exploration). Like exploratory innovation, exploitative innovation introduces challenges that inclusive leaders in particular overcome based on their unique qualities of inclusion. Therefore, inclusive leaders are in two particular ways considered even more influential in facilitating exploitative innovation in organizations compared to exploratory innovation.
First, exploitative innovation needs a certain level of inclusive leadership, as established high quality relationships between leader and employees helps to communicate the need to refine current capabilities in existing domains and apply current knowledge (March, 1991). Particularly, in the context of exploitative innovation leader-member relationships become ever more powerful, as they expand over time, and are reinforced while working on the same products and services. Furthermore, openness, accessibility, and availability enable inclusive leaders to motivate employees to re-use and take advantage of existing learning stored in the firm’s culture, structure, strategy, procedures, and systems
(Vera & Crossan, 2004; Waldman, Ramirez, House, & Puranam, 2001). In addition, openness enhances understanding on how to improve existing products and services, and on what is valued by top management regarding for example the increase in economies of scales in existing markets (Jansen, et al., 2006). Precisely this guidance is needed when a firm’s innovation need is based on a strategic believe in one’s own products and services, while keeping up with its competitors.
Second, the open and trusting work environment created by participation in decision-making, helps inclusive leaders to achieve an effective combination and diffusion of existing knowledge resources (Hanna & Lester, 2009; Jansen et al., 2009). In such work environment, inclusive leaders can exercise a maintenance role that for the sake of efficiency and consistency, implement routines that take advantage of past experiences when refreshing and refining existing innovations. Moreover, through inclusion in decision-making, employees are more likely to support difficult decisions, as they are involved in the making of the decision at hand (Wood & Bandura, 1989). Especially in context of exploitative innovation, decisions are often related to lowering costs of internal processes in order to increase efficiency and productivity (Eriksson, 2013). These cost saving procedures can have negative consequences for employees (i.e. downsizing, mergers and acquisitions, automatizing). As a result, inclusive leader behaviour is considered to be particularly suitable in overcoming these challenges, and eventually realize and optimize exploitative innovation. Hence, it can be expected that:
H2. Inclusive leadership is positively related to exploitative innovation.
The moderating role of functional diversity
While inclusive leaders are considered suitable in facilitating both exploratory innovation as well as exploitative innovation, they also seem to be particularly successful in context of functional diverse work teams (Nishii & Mayer, 2009; Shore, et al. 2011).
Nowadays, the effect of diverse teams in leadership becomes extremely relevant, as organizations increasingly turn towards the use of cross-functional and multidisciplinary teams, inviting increased functional diversity (Knippenberg, et al., 2004). In this respect, functional diversity refers to teams comprising of individuals originating from different functional areas and/or departments of the organization such as marketing, production, and R&D (Keller, 2001).
Teams consisting of members with different functional backgrounds can increase the effectiveness of inclusive leader interventions, precisely because they create a context that reinforces the qualities of inclusive leaders considered beneficial for organizational learning. According to Nembhard and Edmondson (2006) inclusive leaders encourage and appreciate disparate and diverse contributions of all team members, particularly in situations in which their input might not typically be attended to. These disparate and diverse contributions enhance inclusive leader effectiveness, because inclusive leaders are able to leverage from them, and use this to further optimize organizational learning (Hirak et al, 2012; Nembhard & Edmondson, 2006). More precisely, functional diversity enhances the relationship between inclusive leadership and organization learning in four ways (Carmeli, et al., 2010; Nishii & Mayer, 2009; Shore et al., 2011).
First, functional diversity can positively influence the effect of inclusive leadership on organizational learning through introducing enhanced creativity, better problem solving, and increased innovation (i.e. De Dreu & West, 2001, Fiol, 1994; Ford, 1996; Korn, Milliken, & Lant, 1992; Milliken & Martens, 1996; Thomas & Ely, 1996). Research shows that teams with diverse backgrounds, training and perspectives are more likely to generate new ways of problem solving, and to successfully develop creative ideas compared to more homogeneous teams (Jackson, 1992; Thompson, 2003). This increases the effectiveness of inclusive leadership on organization learning, because it reinforces the already positive connections
between inclusion and innovation. For instance, by providing increased creativity due to a great diversity of team member perspectives, inclusive leaders are even more capable of increasing both exploratory as well as exploratory innovation.
A second way functional diversity enhances the positive impact of inclusive leadership on organizational learning is by facilitating a greater variety of (external) perspectives that is being brought to bear on decisions precisely due to functional diversity (Ancona & Caldwell, 1992). These external sources of information would not be available if all teams members belonged to the same functional area. Through this, diversity enhances the positive impact of inclusive leader behaviour on both exploratory and exploitative innovation. When facilitated by an inclusive leader, this available information increases the likelihood of creative and innovative solutions to problems (Cabrales, Medina, Lavado, & Cabrera, 2008). Furthermore, cross-departmental contacts of diverse team members facilitate the need to challenge other departments to explore or exploit knowledge (Ancona & Caldwel, 1992). Therefore, it is likely that inclusive leadership will even more positively influence exploratory and exploitative innovation, when taking functional diversity into account.
A third way in with functional diversity strengthens the effectiveness of inclusive leaders on organizational learning, is by reinforcing improved reciprocal exchanges through the provision of more cross-functional collaboration (Lovelace, Shapiro, & Weingart, 2001). As exploratory innovation implies a high degree of uncertainty, collaboration is critical (Hoegl, Parboteeah, & Gemuenden, 2003; Lovelace et al., 2001). Inclusive leaders solve the potential threat of decreased collaboration due to functional diversity, through developing and exploiting high quality relationships with employees (Nembhard & Edmondson, 2006). This is further strengthened by prior research which found that functional diversity in top management groups was associated with more frequent communication, rather than less frequent communication within teams (Glick, Miller, & Huber, 1993). This enhanced
communication increases the establishment of high quality relationships further (Scandura, 1999). In turn, enhanced collaboration in functional diverse teams increases inclusive leader effectiveness in optimizing organizational learning (Bilimoria, Joy, & Liang, 2008; Hollander, 2012; Thomas & Ely, 1996).
Fourth, through facilitating the need for a climate of trust and inclusion in functional diverse teams (Cronin & Weingart, 2007), inclusive leaders will be even more effective in optimizing organizational learning than without taking functional diversity into account. This is, because diverse team members are more encouraged to share their diverse learning experiences both within and across departments enhancing exploratory and exploitative innovation (Carmeli, et al., 2010). Without a trusting environment, it can even be expected that regardless of the level of diversity in teams, innovation will be problematic. A lack of trust decreases feelings of safety, and so willingness to collaborate, share knowledge, and learn (Carmeli, et al., 2010). Moreover, without functional diversity, facilitation by inclusive leaders of the more complex integration and interpretation of diverse knowledge at the group level, may not be required anymore (Webber & Donahue, 2001). By facilitating two-way interaction, and developing social networks, inclusive leaders strengthen the quality and frequency of communication among diverse team members and between leaders and employees (Hanna & Lester, 2009). Hence, improved group functioning based on functional diverse tams should be evident in increasing inclusive leader effectiveness optimizing organizational innovation.
All in all, through a context of functional diversity, the explicit inclusion of diverse team members’ perspectives facilitated by inclusive leaders, results in an even more powerful role of inclusion in optimizing organizational learning. Consequently, functional diversity enhances the effectiveness of inclusive leaders in optimizing the learning dimensions, because
of the context they provide where inclusive leaders can thrive. Therefore, it can be expected that:
H3a. Functional diversity moderates the relationship between inclusive leadership and exploratory innovation, such that the relationship between inclusive leadership and exploratory innovation will increase when teams are highly diverse.
H3b. Functional diversity moderates the relationship between inclusive leadership and exploitative innovation, such that the relationship between inclusive leadership and exploitative innovation will increase when teams are highly diverse.
The mediating role of psychological empowerment
Next to the direct relationship of inclusive leadership with organizational learning, leader inclusiveness also creates an indirect dynamic towards exploratory an exploitative innovation based on increased psychological empowerment. Spreitzer (1995) defined psychological empowerment as “intrinsic task motivation reflecting a sense of control in relation to one’s work and an active orientation to one’s work role that is manifest in four cognitions: meaning, self-determination, competence, and impact” (Spreitzer 1995, p. 1443). According to Spreitzer (1995) a supportive, trusting relationship between leader and follower is a first important contextual antecedent of psychological empowerment, because this relationship influences how employees experience their work (Liden, Wayne & Sparrowe, 2000; Yukl, 2011). This influenced work experience is related to inclusive leadership, as they are particularly effective in building strong relationships, and fostering a sense of control among employees. In other words, inclusive leaders naturally create the structural conditions
(i.e. opportunities, information, support, resources) that promote psychological empowerment (Laschinger, Finegan, Shamian, & Cassier, 2001; Spreitzer, 1995).
Numerous studies support a strong relationship between leaders and psychological empowerment, showing direct relationships on both individual and team level (e.g. Chen, Kirkman, Kanfer, Allen, & Rosen, 2007; Kirkman & Rosen, 1999; Kark, Shamir, & Chen, 2003; Kraimer, Seibert & Liden, 1999; Liden, et al., 2000). In turn, increased feelings of empowerment are positively associated with a broad range of employee outcomes such as job satisfaction, organizational commitment, and innovation (De Dreu & West, 2001; Fiol, 1994; Seibert, et al., 2011). Employees who feel empowered, are more committed to the organization, more accountable for their work, less likely to experience job strain, and have more trust in management (Laschinger, et al., 2001; Laschinger, Wong, McMahon, & Kaufmann, 1999). These positive effects of empowerment can in turn be positively related to exploratory and exploitative innovation, as research shows that for instance commitment and trust positively affect organizational learning (Levitt & March, 1988).
Inclusive leaders may give employees information about strategic or operational goals that allow employees to see the value of their work, and thus to enhance feelings of
meaningfulness (Seibert et al., 2011). The provision of information is particularly relevant for
inclusive leaders, as they are more open compared to ‘traditional leaders’. Also, participation in decision-making requires a certain degree of access to information for employees to be able to co-decide. Consequently, increased meaningfulness is positively related to exploratory and exploitative innovation, as understanding one’s tasks aimed at organization learning, will contribute to increased job satisfaction, commitment (Liden, et al., 2000), intrinsic motivation, and creative process engagement (Zhang & Bartol, 2010). Hence, more satisfied, committed, and motivated employees are more likely to contribute to organizations’ specific innovation needs.
By allowing participation (in decision-making) and increased autonomy for employees, inclusive leaders enhance employees’ feelings of self-determination and impact in their work (Laschinger, Wong & Grau, 2013; Spreitzer, 1995). By giving employees more impact, decision-making processes can be better understood and realized with the support of motivated employees (Wood & Bandura, 1989). When contributions of all team members are equally valued, everyone will perceive to have impact over team goals, which will foster employee commitment and so willingness to learn and innovate (Seibert et al., 2011). Willingness to learn can be focused primarily on existing knowledge facilitating exploitative innovation and/or on new knowledge fostering exploratory innovation. Thus, the more employees’ self-determination rises by giving opportunities and demonstrating contributions, the more comfortable they will be with continuous development and growth based on a mix of past experiences and/or complete new knowledge.
Finally, inclusive leaders act as role models and provide employees with feedback and coaching which can be seen as a final antecedent for psychological empowerment (Nembhard & Edmondson, 2006). These are essential sources of self-efficacy information that enhances feelings of competence (Bandura, 1997). Additionally, inclusive leaders are more inclined to listen to followers and meet their needs regarding time and/or other resources to accomplish their jobs. These resources can be utilized to either exploit existing knowledge or to explore new competences for the future. Although feedback implies learning from failure - relevant to exploitative innovation - employees’ perceptions of their capabilities to do the job (either exploring or exploiting) are strengthened. Especially in context of exploratory innovation, increased feelings of self-determination and competence are required, because of the risk-taking and uncertainty involved (Nembhard & Edmondson, 2006).
Through psychological empowerment of employees, conditions are created that help inclusive leaders optimize organizational learning. Psychological empowerment enables
inclusive leaders to further develop and establish high quality relationships due to for instance improved feelings of competence and meaningfulness. This increases employee commitment and motivation to collaborate, which in turn helps to optimize organizational learning (Liden, et al., 2000; Zhang & Bartol, 2010). Also, psychological empowerment offers a mechanism of reinforcement based on determination and impact. Through increased feelings of self-determination and impact, employees are more likely to step up and share knowledge, which helps inclusive leaders to build a trusting environment (Carmeli, et al., 2010).
This mechanism of psychological empowerment is further strengthened by inclusion in decision making facilitated by inclusive leaders. This shows a positive reinforcing cycle between inclusive leadership, psychological empowerment, and organizational learning; the higher the level of inclusion, the more empowered employees feel, and more empowered employees will be more willing to contribute to a firm’s innovative goals. Finally, psychological empowerment gives employees more confidence about their capabilities, and so on their contributions to team efforts (Deci & Ryan, 2011). Hence, inclusive leaders influence organizational learning processes based on improved feelings of competence and self-determination. In turn, this helps to improve reciprocal exchanges between team members and the leader, which are in turn beneficial for organizational learning processes.
In conclusion, inclusive leadership is considered to optimize exploratory and exploitative innovation, only when followers perceive their work tasks as meaningful, their skills as competent enough, and themselves as self-determined workers with an impact in the organization. Spreitzer (1995) notes that employees who feel more empowered take control over their work tasks (i.e. self-determination), and employees who feel more confident about their capabilities to perform (i.e. competence) will have better understanding of the value of work goals (i.e. meaning). Hence, increased intrinsic motivation, satisfaction, and tendency to seize opportunities are assumed to evolve in optimized organizational learning. What is more,
research shows that a lack of empowerment among employees might even decrease innovative behaviour (Pieterse, Van Knippenberg, Schippers, & Stam, 2010). In other words, psychological empowerment functions as a prerequisite for inclusive leadership to optimize organizational learning, as it is required to on the one hand mitigate the challenges innovation brings, and on the other hand foster employee perceptions towards organizational learning. Hence, it can be expected that:
H4a. Empowerment mediates the relationship between inclusive leadership and exploration.
H4b. Empowerment mediates the relationship between inclusive leadership and exploitation.
Figure 1 illustrates the expected relationships between the study variables.
Figure 1. Conceptual model of hypothesized relationships.
Method Sample and procedure
To test the predictions, a quantitative multi-source, cross-sectional survey study was conducted measuring perceptions of respondents including behaviours, attitudes, and opinions
(Saunders, Saunders, Lewis, & Thornhill, 2011). The research was carried out with teams consisting of leaders and followers working in different organizations in the Netherlands. Therefore, two different surveys were developed and distributed, one intended for the leader and another for employees (i.e. followers). The survey of the employees focused on leadership style, well-being, and empowerment, took approximately 20 minutes to complete. The shorter leader survey, in which leaders evaluated employee behaviour, their own leadership style and organizational innovation, took approximately 10 minutes to complete. Gathering data in this way avoided common source bias (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003).
Members of a thesis project group at the University of Amsterdam collected the data together within a period of four weeks in March and April 2017. Both online surveys were available in Dutch and English, depending on the nationality of the respondent. Since scales were adopted from English studies, for the Dutch version the back-translation technique was used. The respondents received the survey by email and a web-based questionnaire tool, Qualtrics, was used to collect the data. All respondents were informed about the main purpose of the research project, and asked to participate voluntarily. Because respondents of the same team were matched by their email addresses, this research was not completely anonymous. However, informed consent was obtained in which the confidentiality of the respondent’s participation was assured. Each questionnaire contained a concise introduction in which the intent, the length, and other ethical and procedural aspects were outlined. Appendix A presents the instructions, as viewed by the respondents. Several reminders were sent to enhance the response rate. In return for their participation, the respondents were offered a report with the main findings and practical implications of the study.
least ten teams consisting of a leader and at least three members based on non-probability sampling techniques (i.e. convenience sample). Managers and/or employees from personal networks of contacts were invited by e-mail to fill out the questionnaire. Probability sampling was used due to time limitations and access constraints, yet it increased generalizability of the results as it enabled the researchers to achieve an appropriate sample size in a relatively fast and inexpensive way (Field, 2009). Moreover, the non-probability sampling and joint data collection by multiple researchers led to a diverse sample consisting of employees active in a wide variety of occupations and sectors ranging from IT to accountancy, from medical health to lawyers, and from profit to non-profit organizations.
The final data sample consisted of 77 teams, including 77 leaders and 318 employees, corresponding to response rates of 97% and 77%, respectively. Missing data in the surveys reduced the usable sample for leaders to 61, and for employees to 279. In total 61 teams were used to do further analyses. The final sample consisted of 38 male (62.3%) and 22 female (36.1%) leaders, one leader indicated to be gender neutral. The average age of the leaders ranged between 31 and 40 years old (M = 3.48, SD = 1.25). Most of the leaders (50.8%) possessed a university degree and their work tenure ranged from less than one year to more than 38 years, with an average tenure of 11 years (M = 11.37, SD = 11.04). 72.1 per cent of the teams were project based, and 38 teams (62.3%) were cross-functional. 136 of the employees were male (48.7%) and 98 were female (35.1%), two employees indicated to be gender neutral. Employees’ average age ranged between 20 and 30 years old (M = 3.15, SD = 1.27). Education levels of employees were divided with a relative equal distribution; a bit more than half of all employees (52.2%) had a degree of university of professional education or lower, the remaining half of the employees (47.5%) had a university degree or higher. Furthermore, employee tenure varied greatly, from less than one year to more than 40 years, with an average tenure of 8 years (M = 8.23, SD = 10.93).
Measures
All variables were operationalized by using scales adopted from extant literature. Detailed descriptions of the item wordings can be found in Appendix B. Unless otherwise indicated, all items were rated on a seven-point Likert scale ranging from “strongly disagree” (1) to “strongly agree” (7). Overall scale scores were computed by averaging item means. Inclusive leadership and psychological empowerment were measured from the perspective of the employee. Both exploratory and exploitative innovation, as well as diversity, were indicated by the leader.
Inclusive leadership. Inclusive leadership was measured with a 9-item scale developed
by Carmeli et al. (2010) aiming to assess the three dimensions of inclusive leadership; openness, accessibility, and availability. Participants were asked to assess the extent to which their leader displays openness, is accessible and/or is available at work. To address the participative decision-making dimension of leader inclusiveness, three additional items were included, adopted from the empowering leadership scale (Hearne, Mathieu, & Rapp, 2005). An example item is ‘My manager is available for professional questions I would like to consult with him/her’. A mean index variable was created expressing inclusive leadership (M = 5.6, SD = 0.92). Cronbach’s alpha values showed that the scale is highly reliable (Cronbach's alpha = .93).
Exploration. Exploratory innovation was measured with a 7-item scale developed by
Jansen et al. (2006). Participants were asked to indicate the extent to which their organization displays exploratory innovation. An example items is ‘We experiment with new products and services in our local market.’ A mean index variable was created expressing exploration (M = 4.80, SD = 1.20). Cronbach’s alpha values showed that the scale is reliable (Cronbach's alpha = .87).
Exploitation. Exploitative innovation was measured with a 7-item scale developed by
Jansen et al. (2006). Participants were asked to indicate the extent to which their organization displays exploitative innovation. An example items is ‘We increase economies of scales in existing markets.’ A mean index variable was created expressing exploitation (M = 5.2, SD = 1.08). Cronbach’s alpha values showed that the scale is reliable (Cronbach's alpha = .89).
Diversity. Functional diversity was measured with an open-ended question indicated
by the leader. The question asked ‘Please indicate the amount of individual team members with different functional diverse backgrounds in your team?’ Provided answers indicated the amount of functional diversity within the team ranging from 1 to 12 different functional backgrounds (M = 4.61, SD = 2.82). This indicates that the higher the number of functional backgrounds in the team, the more functionally diverse the team is.
Psychological empowerment. Psychological empowerment was measured with a
12-item scale developed by Spreitzer (1995) aiming to assess all four dimensions of psychological empowerment, meaning, competence, self-determination, and impact with each three dimensions. Participants were asked to indicate the extent to which their leader fosters employee empowerment. An example items is ‘I am self-assured about my capabilities to perform my work activities.’ A mean index variable was created expressing empowerment (M = 5.3, SD = 0.80). Cronbach’s alpha values showed that the scale is reliable (Cronbach's alpha = .87).
Control variables. To rule out potentially spurious relations, all analyses controlled for
project based and cross-functional teamwork. Both controls were theoretically related, and statistically correlated with inclusive leadership and both dimensions of organizational learning, and could therefore influence the main results. Innovation driven organizations often organize their work in project based teams that consist out of multiple functional backgrounds
(Gann & Salter, 2000). Both variables were transformed into dummies to be included in the regression analyses. The answer categories were ‘yes’ (coded as 1) and ‘no’ (coded as 0). Data analysis
The aim of this study is to find support for the expected positive direct relationships between inclusive leadership and exploratory and exploitative innovation. Additionally, this research expects to find support for the moderating effect of functional diversity on the relationship between inclusive leadership and both exploratory and exploitative innovation. Furthermore, it is expected that psychological empowerment will have a mediating, indirect effect on the direct relationships between inclusive leadership and both exploratory and exploitative innovation.
All data obtained were analysed with IBM’s Statistical Package for social sciences version 22. Since unanswered questions are recognized by SPSS as missing value, no additional respondents were deleted from the sample. Also, no counter-indicative items were found and no outliers were deleted. Scale reliabilities were reviewed. No changes were made to the existing item compositions, since all Cronbach’s alpha values were above the acceptable value 0.8. This means that scale reliability can be assumed, and no items had to be deleted (Field, 2009; Pallant, 2010). The total sample size on which all analyses were drawn consisted of 223 respondents who answered all the investigated variables.
Scale means were computed by averaging the items corresponding to each scale. Afterwards, preliminary analyses were performed to ensure no violation of the assumptions of normality, linearity and homoscedasticity. By analysing skewness and kurtosis coefficients, as well as by checking the normal probability plots (Chambers, 1983), it was revealed that data was normally distributed. Though outliers were identified, none of them were removed, since they resulted from the inherent variability of the data, and did not significantly affect the analyses. Moreover, the benefits from a possible transformation of data are debatable (Field,
2009). Furthermore, according to the central limit theorem, one can expect that the sampling distribution will be normally distributed, because this research has a large sample (N = 223), and only light tailed distributions within the dependent variable (Wilcox, 2005; Field, 2009). For these reasons the possibly violated assumptions of normality are kept in mind, but the variables are not manipulated and it is assumed that the sample is representative for the population.
The expected direct, moderation and mediation effects are analysed by PROCESS analysis of Hayes (2012). Hayes’ (2012) PROCESS method, including bootstrapping (Shrout & Bolger, 2002), allows for testing all expected relationships to be tested at once using model 5. Bootstrapping is a non-parametric method for estimating properties of the sampling distribution based on the sample data, and it is an alternative to overcome lack of normality for testing mediation (Field, 2009). Hence, it can be assumed that the indirect and moderating effects will not be normally distributed, since the product of two variables will tend to be skewed (Shrout & Bolger, 2002). Bootstrap tests involve computing bias-corrected and accelerated 95% confidence intervals. To find support for all expected effects, 10.000 bootstrap samples were extracted.
In the analyses testing the effects on exploratory innovation (dependent variable), the independent variable was inclusive leadership, the mediating variable (M) was psychological empowerment, and the moderating variable (W) was functional diversity. For testing the effects on exploitative innovation, the analysis was repeated with exploitation as dependent variable. For all analyses, the control variables were project based and cross-functional teamwork.
Results
Means, standard deviations and inter-correlations of the main variables are reported in Table 1. The mean scores indicate that the employees in the sample experience their leader to be quite inclusive (M = 5.6, SD = 0.92), and they feel relatively empowered (M = 5.3, SD = 0.80). Additionally, leaders rate their organizations quite high on innovation, with a clear emphasis on exploitation (M = 5.2, SD = 1.08) rather than exploration (M = 4.8, SD = 1.20). Teams are considered quite diverse, with on average 4 to 5 different functional backgrounds (M = 4.6, SD = 2.82).
As shown in Table 1, there is a significant positive correlation indicated by Pearson’s correlation coefficient between inclusive leadership and both exploratory and exploitative innovation. This provides initial support for (H1, H2) the expected direct relationships (both score r = .15, p < .05), but the strength is low (Lee Rodgers & Nicewander, 1988). Furthermore, positive low to moderate correlations are found between empowerment, inclusive leadership and both dimensions of organizational learning (H4). Also diversity is shown to significantly correlate with exploration and exploitation (H3). These results seem to establish support for the first steps of the expected moderation and mediation effects in the third and fourth hypotheses (Field, 2009). Both empowerment and diversity positively correlate with exploratory and exploitative innovation, respectively r = .21, p < .001, and r = .25, p < .001, and r = .38, p < .001 and r = .18, p < .001. Noteworthy is that moderate positive correlations are shown between project based, cross-functional teamwork, and both exploratory and exploitative innovation. Finally, exploratory and exploitative innovation are highly correlated (r = .62, p < .001), however this makes sense statistically since both scales measure the overall construct organizational learning.
Table 1.
Descriptive statistics and correlations of the study variables
Mean SD 1 2 3 4 5 6 7 1 Exploration 4.8 1.20 (.87) 2 Exploitation 5.2 1.08 .63** (.89) 3 Inclusive leadership 5.6 0.92 .15* .15* (.93) 4 Empowerment 5.3 0.80 .21** .25** .38** (.87) 5 Diversity 4.6 2.82 .38** .18** .11 .08 (--) 6 Project based 0.7 0.45 .41** .27** .14* .07 .30** (--) 7 Cross-functional 0.6 0.49 .40** .06 .10 .22** .27** .44** (--)
Note. ** Correlation is significant at the 0.01 level tailed). * Correlation is significant at the 0.05 level
(2-tailed). Listwise N = 223. Cronbach's alpha coefficients on diagonal.
To examine the direct relationship between inclusive leadership and exploratory innovation (H1), the control variables project based and cross-functional teamwork were entered in the first step of the hierarchical regression analysis, and inclusive leadership was entered in the second step as the independent variable (see Table 2, step 1 and 2). The controls were entered to examine if they could explain additional variance above and beyond inclusive leadership. The model with exploratory innovation as the dependent variable was significant, F (3, 254) = 21.92, p < .001. Inclusive leadership could not explain additional variance in exploratory innovation R2
= .21, Fchange (1, 254) = 2.50, p = n.s. As presented in Table 2, while both project based (b = 0.69, b* = 0.26, t = 4.21, p < .001) and cross-functional (b = 0.61, b* = 0.25, t = 4.08, p < .001) teamwork are significantly related to exploratory innovation, inclusive leadership is not significantly related to exploratory innovation (b = 0.12, b* = 0.09, t = 1.58, p < n.s.). In other words, inclusive leadership does not increase exploratory innovation directly. Therefore, Hypothesis 1 is rejected.
Table 2.
Results of the Hierarchical Regression Analyses for Inclusive Leadership Explaining Exploratory Innovation
Exploratory innovation Step 1 Step 2 Adj. R2
ΔR2 ΔF Step 1: Control variables .19 .20 31.44*** Project based .72*** .69*** Cross-functional .62*** .61*** Step 2: .20 .01 2.50 Inclusive leadership .12
Note. N = 258. Standardized regression coefficients are shown. *p < .05, **p < .01. ***p = .001.
Similarly, to examine the direct relationship between inclusive leadership and exploitative innovation (H2), the model with exploitative innovation as the dependent variable was significant, F (3, 254) = 7.15, p < .001 (see Table 3, step 1 and 2). Inclusive leadership explained additional variance in exploitative innovation R2
= .08, Fchange (1, 254) = 3.82, p = .05. As presented in Table 3, project based (b = 0.60, b* = 0.26, t = 3.83, p < .001) teamwork is significantly related to exploitative innovation, but cross-functional teamwork (b = -0.12, b* = -0.06, t = -0.85, p < n.s.) is not. Most importantly, inclusive leadership is significantly positively related to exploitative innovation (b = 0.14, b* = 0.12, t = 1.96, p = .05.). In other words, inclusive leadership positively relates to exploitative innovation, such that an increase in inclusive leader behaviour, increases exploitative innovation with 0.14. Hence, this result confirmed Hypothesis 2.
Table 3.
Results of the Hierarchical Regression Analyses for Inclusive Leadership Explaining Exploitative Innovation
Exploitative innovation Step 1 Step 2 Adj. R2
ΔR2 ΔF Step 1: Control variables .06 .06 8.72*** Project based .63*** .60*** Cross-functional -.11 -.12 Step 2: .07 .01 3.82 Inclusive leadership .14*
Note. N = 258. Standardized regression coefficients are shown. *p < .05, **p < .01. ***p = .001.
To test whether functional diversity moderated the pathway between the predictor variable (inclusive leadership) and the outcome variables (exploration and exploitation), a moderation effect was analysed. The PROCESS analysis provided significant results for the expected relationships between inclusive leadership and innovation. For exploratory innovation, the model as a whole was significant F (6, 216)= 11.07, p < .001. The whole set of predictors could therefore be used to predict exploration. The variables predicted 23.5% of the variance in exploration (adj., R2
= .24). For exploitative innovation, the model as a whole was significant as well F (6, 216)= 6.13, p < .001. The variables predicted 14.6% of the variance of exploitation (adj., R2
= .15).
In Table 4 (exploration) and 5 (exploitation), it is shown that the expected positive moderation effect of functional diversity on the relationship between inclusive leadership and both outcome variables was not found.
Table 4.
Results of PROCESS analysis with independent variable exploration
Consequent
M (Empowerment) W (Diversity) Y (Exploration) Antecedent Coeff. SE p Coeff. SE p Coeff. SE p X (Inclusive leadership) a .30 .05 <.001 -- -- -- C1’ .07 .15 .66 M (Empower) -- -- -- -- -- -- b .18 .10 .08 W (Diversity) -- -- -- -- -- -- C2’ .13 .18 .47 XW (Inclusive leadership × diversity) -- -- -- -- -- -- C3’ -.01 .03 .86 Project based -.17 .12 .15 -- -- -- .46 .18 .01 Cross-functional .40 .11 <.001 -- -- -- .54 .17 <.01 Constant I1 3.78 .32 <.001 I2 -- -- -- I3 3.63 .90 <.001 R2 = .18 R2 = .24 F(3, 219) = 15.85, p <.001 F(6, 216) = 11.07, p <.001
The direct relationships between inclusive leadership and exploratory and exploitative innovation are not significant, respectively c1’ = 0.07, SE = 0.15, t = 0.45, p = n.s., 95% CI [-0.23, 0.37], c1’ = 0.21, SE = 0.14, t = 1.44, p = n.s., 95% CI [-0.08, 0.49]. Also in neither case diversity significantly predicted organizational learning, c2’ = 0.13, SE = 0.18, t = 0.73,
p = n.s., 95% CI [-0.22, 0.49], and c2’ = 0.27, SE = 0.17, t = 1.61, p = n.s., 95% CI [-0.06,
0.60] respectively. Finally, the interaction effect (inclusive leadership × diversity) is in neither of the cases statistically different from zero. Functional diversity does neither significantly moderate the relationship between exploratory innovation and inclusive leadership, nor between exploitative innovation and inclusive leadership, c3’ = -0.01, SE = 0.03, t = -0.18, p
