Individual Innovative Behavior
Climate & Cognitive Styles
University of Amsterdam Master Thesis Business Studies
International Management & Entrepreneurship and Innovation Supervisor Dr. Dipl.-‐Wirt.-‐Ing. Sebastian Kortmann
Student Marieke van de Fliert Student number 10420223
Table of Contents
1 ABSTRACT
3
2 INTRODUCTION
3
3 DEFINITION OF INDIVIDUAL INNOVATIVE BEHAVIOR
6
3.1
The effect of Climate 7
3.2
The effect of Cognitive Styles 7
4 LITERATURE REVIEW
8
4.1
Reward systems and Individual Innovativeness 9
4.2
Unfairness and Individual Innovativeness 10
4.3
Types of labor contracts and Individual Innovativeness 11
4.4
Cohesion and Individual Innovativeness 13
4.5
Cognitive styles and Individual Innovativeness 14
5 METHODS
17
5.1
Procedure and Respondents 17
5.2
Measures 17
6 ANALYSIS AND RESULTS
21
6.2
Factor Analysis and Ordinary Least Squares: Cognitive Styles 26
7 DISCUSSION AND THEORETICAL IMPLICATIONS
27
8 LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCH
32
9 REFERENCES
34
10 APPENDIX
37
1 Abstract
This thesis reviews the effects that a working climate and the personal characteristics of individual employees might have on individual innovative behavior. A survey carried out among 82 respondents examined how both triggers from the within the working environment, one can think of the rewarding of innovative behavior and the (un)fair critique on an individual’s innovative investments, as well as the individual’s intrinsic possession of innovator-‐characteristics can have a positive effect on the innovative behavior of individual employees.
2 Introduction
Are humans born creative? There has been an on-‐going discussion about whether the one person is born to be more innovative than the other, or whether it is the environment that plays the major role in becoming innovative or not. One thing is for sure, being innovative and designing new frameworks is an important source of growth
for organizations nowadays. In the current business environment, innovation is mostly regarded as the organization’s responsibility, involving different actors (Greif & Keller, 1990). One of the major reasons why employees innovate comes down to bringing performance gains. Existing ways of working are improved and new technologies are presented, all in order to bring efficiency and performance gains.
Where innovation used to be seen as the invention and commercialization of new products, the focus is now more on the specialized and functional responsibility of getting there. Maute & Locander (1994) concluded this by stating that there has been a shift from a technological to a more socio-‐political paradigm. One of the most interesting issues they address is the focus on how the different actors in organizations are able to accommodate the importance of successful innovation for the organization as a whole, while at the same time individual employees feel the need to protect and advance their self-‐interest. Yuan and Woodman (2010) also mentioned the shift of innovation toward a more social-‐political process. Rather than focusing on how innovation should be carried out theoretically, the focus now is on how innovation actually works in the real world. In contrast to previous research, the importance of legitimacy and image considerations are also taken into account when explaining the decisions made on the adoption of innovations. Examples of innovations that have been adopted because of the representational meaning and passed the economic performances of the organization, emphasize the symbolic function that innovativeness has nowadays. NIKE Inc. for example is known for their emphasis on constantly innovating their products and on a high quality construction of it (NIKE, Inc. 2013 Notice of Annual Meeting, 2013).
A statement by Allinson & Hayes (1998) clearly marks the role that cognitive styles can have in different environments, the workplace is one of these environments:
‘Cognitive styles is a person’s preferred way of gathering, processing, and evaluating information. It influences how people scan their environment for information, how they organize and interpret this information and how they integrate their interpretations into the mental model and subjective theories that guide their actions’. Kirton (1976) was one of the first to recognize the importance of cognitive styles as the main drivers behind individual innovative behavior, followed by a lot of researchers, for example Miron, Erez and Naveh (2004), who acknowledge cognitive styles as the main driver behind an employee’s creativity.
It goes without saying that organizations have to be innovative in order to survive; this thesis will look at the specific case of individual innovative behavior of their employees. Within this concept, there are two different underlying factors that influence the level of innovativeness of individuals; the working climate can be seen as the main driver behind individual innovative behavior as well as the different intrinsic cognitive characteristics of each individual employee. Where previous studies mostly focused on one of these aspects, this thesis will take a closer look at the importance of an innovation-‐supportive climate on the one hand and cognitive styles of individual employees on the other hand. Should the focus be on the effects of climate factors or on personal characteristic of each individual in order to enhance innovative behavior of individuals?
The first part of the research elaborates on the concept of individual innovative behavior itself, from where the literature review results in hypotheses. These hypotheses will be tested with the use of data that is gathered via online surveys, factor analyses and regression analyses will provide the outcomes that are needed to conclude whether or not the different factors that are tested have a significant effect on individual innovative behavior.
3 Definition of Individual Innovative Behavior
Individual innovative behavior can be measured in different ways, which makes it interesting to see if there is one clear definition for this concept that covers the items that are measured best. The ability of individuals to be creative and innovative, individual innovative behavior, is defined in many different ways by various researchers. The terms innovation and creativity are often used interchangeably and there is still little agreement on the concept of innovation. Hurt et al. (1977) generalized innovative behavior as a willingness to pay, Scott and Bruce (1994) defined innovation as the ‘adaptation or production of useful ideas and the implementation of it’. Janssen (2004) describes innovative behavior more precisely as ‘the intentional creation, introduction, and application of new ideas within a work role, group, or organization, in order to benefit role performance, the group, or the organization’. Innovation starts with recognizing a problem, which leads to generating ideas or solutions in order to solve that problem. Within the process of innovative behavior, three phases can be distinguished: the generation of an idea, the promotion of it, and the idea realization itself. Kleysen and Street (2001) defined individual innovative behavior as ‘all individual actions directed at the generation, introduction and or application of beneficial novelty at any organizational level.’ This novelty can be beneficial in the development of a new technology or a new product idea, but also in changing administrative procedures in order to improve effectiveness and efficiency. Janssen (2004) also mentioned the importance of support during these phases. This support can be found in friends, family, sponsors etc. and it empowers the individual to actually realize the idea in the end. An innovative individual should seek for support and sponsorships and should try to build a group of supporters.
3.1 The effect of Climate
Most recent studies have attempted to explain the innovativeness of individuals by focusing on the working climate. An innovative-‐supporting working climate can be seen as the context that is created in order to enhance innovation; it directly influences the ability of individual employees to become innovative (Montes et al., 2004). This working climate sets expectations for potential outcomes and the behavior itself. An innovation supportive climate comes with norms and value that favor change; this will lead to more change initiated by their employees, rather than following traditions. Besides that, a climate that is pro-‐innovation also encourages individual innovativeness by legitimating experimentation. In order to create an innovation-‐enhancing climate, theory strikes the importance of communicating the need for change. The created climate has to demonstrate the belief that innovation is the key to a more successful and efficient organization. If this whole culture is integrated and transmitted to employees, individual innovativeness will be encouraged (Yuan & Woodman, 2010).
3.2 The effect of Cognitive Styles
The determinants of innovative behavior can be described by using the individualist approach. According to this perspective, the determining factors in organizational innovation can be traced back to individual characteristics, such as the natural drive for leadership and the (un)resistance toward changes. Yuan and Woodman (2010) stated that the innovative behavior of employees enables them to cope with the dynamic business environments they are active in nowadays. The intrinsic interest of individuals in the task that they are expected to fulfill is used to describe an individual’s innovative behavior. This interest can be directly linked to their innovative behavior, since the presence of an interest has a positive effect on individual creativity, which is essential in
the process of being innovative. A humanly aspect of any behavior is the expected consequences it has; this will also hold in the case of innovative behavior. However, there still is a lack of research on how psychological characteristics and social effects affect the outcome of innovativeness and which role the different consequences for employees play. With respect to consequences of individual innovative behavior, previous research focused on the consequences on job performance and the affect on the employee’s image inside the company (Yuan & Woodman, 2010).
4 Literature review
Previous studies looked at the relationship between organizational climate and the innovativeness by focusing on the number of innovative ideas and practices (Montes et al., 2004). However, it is also important to look at the effect of a working climate on the earlier process of innovation, not only at the outcomes of innovativeness. Fundamental for innovative outcomes is the starting phase of the process, which is before introducing and adopting the innovation. This starting phase can be seen as the openness to innovative behavior and determines whether individual employees resists innovation or value the adoption of innovations. The notion of openness to innovation can have a major influence on an employee’s perception of support for innovative behavior. It can be summarized as a measure of the effect of an organization’s orientation toward innovations on individual innovativeness. Openness to innovativeness can be shown by for example rewarding individual innovative behavior (Chandler et al., 2000). However, Miron, Erez and Naveh (2004) already mentioned the importance of personal characteristics of the employee in promoting innovativeness. They created a link between creativity and innovativeness, stating that creativity is a personal characteristic
that can be seen as most directly associated with innovation. Based on several studies, factors that might have an influence on individual innovative behavior, both climate and cognitive, are discussed; hypotheses will be formed based on that knowledge.
4.1 Reward systems and Individual Innovativeness
Following Chandler et al. (2000), a reward system can influence innovative behavior of individual employees. This reward system has to be well planned, in order to be an effective tool that reinforces the innovative behavior that is expected from the individual employees. Rewards can be given in different forms; tangible assets like money and goods, but rewards can also be intangible, since it might result in more status and self-‐esteem and more job-‐related responsibilities (Janssen, 2004). A reward system should focus on the individual’s factors that are ‘intrapreneurial’, for example creating the ability for individuals to be more risk-‐taking. Employees could be more afraid of taking risks when failing has negative consequences. When the climate is such that the willingness to change is shown by rewarding outcomes that lead to this change, openness and the sharing of information among individuals is encouraged. This in turn will lead to a better environment to be innovative in. However, it is implied that individual rewards might also lead to a lower level of information sharing, since there is a risk that someone else will benefit from others’ information and knowledge. Chandler and Hanks (1993) on the other hand, show that some organizations are doing better because they reward the fact that employees work conforming to the rules, without being very innovative. This in contrast to organizations that believe they are performing better because of a reward systems that encourages individuals to be innovative.
Hypothesis 1a: The positive rewarding of innovative behavior will lead to more individual innovativeness.
Janssen (2004) creates a link between the reward system and the amount of stress that employees feel. When rewarding individual innovative behavior, individuals know that that is what they are expected to be; innovative. Stress is defined as the psychological reactions to the demanding of individual innovative behavior. The relation that could be found between these cause and effect means that rewards lead to more stress, which in turn results in anxiety and tension and employees might feel less freedom to work. In a working environment where employees feel the pressure to succeed in being innovative, too much pressure can impede innovative behavior.
Hypothesis 1b: Pressure put on individual to become innovative will have reverse effects on individual innovativeness.
4.2 Unfairness and Individual Innovativeness
These reactions to demanding behavior can depend on the perceptions that individuals have toward unfairness. Individuals who see their innovative investment unrewarded or under rewarded show a greater likelihood of stress compared to individuals who perceive their investments as fairly rewarded. Following this statement made by Janssen (2004), an investment-‐reward ratio can be used to evaluate the exchange relationship between unfairness and individual innovative behavior. Companies design and use different procedures to determine the different rewards for different investments made by individuals. These procedures are based on several factors, like representativeness, consistency, ethics etc. Earlier research showed that procedures that are regarded as
being fair, lead to an easier acceptance of rewards that are unfavorable by the employee. Based on Janssen (2004), there is an expected relation between (un)fairness and individual innovativeness, where high fairness will work as an extra trigger to be, or become innovative, since there is a lower risk that your investments will be under rewarded. On the other hand, in case of an unfair procedure, it is more likely that individuals will react negatively to unfavorable rewards. Janssen (2004) stated that individual innovative behavior might be more stressful when the procedural fairness is low, which in turn discourages innovativeness.
Hypothesis 2: When employees feel that they are rewarded and judges in an unfair way, it will discourage them to be or become innovative.
4.3 Types of labor contracts and Individual Innovativeness
Montes et al. (2004) stated that the type of labor contract has always been of fundamental importance in economics, since it has a direct effect on the amount of effort that employees show in general. Despite the fact that permanent and temporary contracted employees are from an objective point of view immersed to have the same position within the organization, in reality it turns out that a different type of labor contract has its effect on the innovativeness of the individual. This is all based on the assumption that the overall perception that individuals have on the same issue can be different; various individuals can observe the same thing, but still perceive it in very different ways. The way the organizational climate is perceived by individuals, is (partly) characterized by the type of labor contract these individuals have. Fixed-‐term contracts are characterized by leaving the individual with more insecurity, which in turn affects the way in which they perceive the organizational climate and consequently their
behavior (Montes et al., 2004). This all can be traced back to the different human resource practices. The policies and practices used can have a direct effect on an employee’s perception of the climate of the organization. Pfeffer (1995) already emphasized the influence of the labor relation, starting at the human resources department of a company. Like Montes et al. (2004), Pfeffer (1995) found that employees on a temporary basis have, among other things, a more favorable attitude toward a reward system than employees with a permanent contract have. However, there were no striking differences found in the employee’s attitude toward participation when it comes to decision-‐making. This research showed that individuals working on the basis of different types of contracts still show almost the same level of co-‐operation within the organization, while Montes (2004) claimed to see differences in the level of co-‐operation between individuals with different types of contracts. Montes (2004) stated that the individual’s commitment and willingness to co-‐operate is characterized and influenced by the contractual relationship they have with the organization. It is implied that there is a negative relationship between individuals working on a fixed-‐term contract and commitment to the organization; these employees are less committed, meaning that they are more willing to leave the company once they are offered an opportunity to increase their status, income, and/or job position. The underlying cause of this lower commitment is based on the lack of confidence they get from the employer. By offering employees a permanent labor contract, they will gradually feel more committed to the organization and the confidence and security they get might be directly related to a more innovative behavior (Montes et al., 2004).
Hypothesis 3: The security of a permanent labor contract will lead to more individual innovativeness.
4.4 Cohesion and Individual Innovativeness
Another important aspect of a working climate is formed by (a lack of) cohesion among individual employees. Lovelace et al. (2001) found evidence for a significant relation between a lack of cohesion and the ability of individuals to find solutions together. The fact that there is no, are at least little agreement among the different members of a working group, will have a direct effect on the innovativeness of the individual employees. One of the major effects here is that the individuals will become more committed to their own position. This makes it more difficult to reach consensus when needed, which in turn leads to a delay in the process of innovation. In case of disagreement among different individuals, it will be easier to reach consensus if the different actors can communicate freely and express their opinion on an issue. Lovelace et al (2001) stressed the importance of communication and the offering of more freedom to express opinions for individual employees. In order to achieve an innovation-‐enhancing working climate, characterized by strong cohesion among the different individuals, freedom and open communication is required. Lovelace et al. (2001) concluded this by stating that ‘the innovative ability of an organization’s members will depend on how disagreement is managed by the organization’. On the other hand, Miron, Erez and Naveh (2004) imply that organizations initially attract those people with a certain personal attribute that matches the organization’s characteristics. This statement is derived from the assumption that behavior can be seen as a function of the environment and the person; these two factors have to be compatible. When the employee’s characteristics and the organizational environment match, this high congruence will lead to psychological well-‐being, high satisfaction and more commitment. This last point about commitment is of special interest for this hypothesis since it assumes that cohesion could arises automatically, based on the fact that an
organization hires employees with matching characteristics. This in turn will lead to more co-‐operation, knowledge sharing and individual innovativeness
Hypothesis 4: More cohesion among individuals will lead to more individual innovativeness.
4.5 Cognitive styles and Individual Innovativeness
Scott and Bruce (1994) emphasized the importance of the cognitive factors that enable individual innovative behavior. Instead of concentrating on the effects of socio-‐political factors on individual innovative behavior, the focus is now on the individual’s cognitive characteristics, which reflects the psychologically meaningful interpretation of a certain situation. It is important to have knowledge about the true characteristic of each individual employee, since everyone interprets situations differently.
Within cognitive styles, a distinction can be made between adaptors solving problems within an already existing framework on the one hand and innovators who reconstruct those frames on the other hand (Scott and Bruce, 1994). Kirton (1976) already observed that people characteristically produce different solution when they were offered a similar problem. The differences in innovative behavior between individuals were measured and explained by focusing on cognitive styles, in this research the distinction between adaptors and innovators was introduced for the first time. Kirton’s (1976) observations showed that where the one individual felt the need to do things differently, the other one felt he/she had to do things better. In the first case, where innovation was more radical, it turned out that the structure that surrounds the problem was incorporated more and treated as part of the problem itself. In the second case of adaptive innovation, this structure was less challenged. Following this study by
Kirton (1976), it can be stated that every individual can be placed on a ranking, with adaptive individuals at the left and innovative individuals at the right. Based on the fact that an individual can characteristically innovate or characteristically adapt, it can be stated that personality is relevant in analyzing individual behavior. This in turn led to further exploration on different behaviors that are related to the two different cognitive styles. The individuals that are more focused on the fact that they want to solve problems in a better way, showed to stay closer to already existing paradigms. This in contrast to the individuals who are focused on changing the paradigm as well and want to solve problems differently (Kirton, 1976).
Some major differences are found when psychological characteristics leading to this division of individuals are investigated. The adaptor, who comes up with innovations in order to do things better, is characterized by for example precision, efficiency and discipline. These adaptive individuals are concerned with resolving problems, rather than finding them. Stability, continuity and reliability are important, adaptive individuals rarely challenge existing rules and like to work within given structures. This in contrast to innovator-‐characteristics that were found by innovative individuals, since these individuals are undisciplined and they approach the task form unsuspected angles. Innovators, who want to do things differently, are willing to take risks and do not mind shocking opposites and creating dissonance. However, these individuals also tend to take control in unstructured situations earlier. They are willing to challenge rules and they are less holding on to past customs and beliefs. One of the most important characteristics of the innovator is the lower self-‐doubt when it comes to generating ideas; innovators do not need consensus to maintain confidence when facing opposition (Kirton, 1976).
Hypothesis 5: Cognitive characteristics determine whether individuals are adaptors or true innovators.
Scott and Bruce (1994) made a distinction between two different problem-‐ solving styles of individual innovativeness, but based on a different mode of thinking, namely that an individual can be either systematic or intuitive. When solving problems systematic, the individual works within already established methods and procedures. It can be stated that it is likely that this way of working results in more conventional ways of problem solving. This knowledge can be linked to the work of Kirton (1976) and it can be concluded that the systematic problem solver has a lot in common with the adaptive individual, since he or she is not likely to challenge already existing structures. The intuitive problem solver, in contrast, does not pay that much attention to the existing rules and boundaries and relies more on intuition. Because of the fact that the intuitive individual is more able to process information gathered from different paradigms, more novel solutions to problems can be created. Kirton (1976) would see this individual as being truly innovative, in order to do things differently. Scott and Bruce (1994) concluded that, based on these characteristics, the systematic problem-‐solving individual would be negatively related to innovative behavior, in contrast to the intuitive individual, who would be related to innovative behavior in a positive way.
Hypothesis 6a: A systematic problem-‐solving individual will show less innovative behavior.
Hypothesis 6b: An intuitive problem-‐solving individual will show more innovative behavior.
5 Methods
5.1 Procedure and Respondents
An online survey created using Qualtrics Online Survey Software was distributed among employees via company mails and via personal networks. Out of the 143 potential respondents that were reached, 130 actually started the survey and provided partial data, constituting a response rate of 87,8%. 97 surveys were received back with significant partial data that could be used for either one or more hypotheses and 82 were received back completely filled out, resulting in a finished response rate of 63,1%. There could no significant differences be found between non-‐respondents and respondents when it comes to companies and/or job position. The average age of the 82 respondents is 34,2 years, with an average of 8,9 years of experience in their current working field. Out of the final sample, 44% was male and 63 respondents are working on the basis of a permanent contract, 19 respondents have a temporary contract.
5.2 Measures
Individual innovative behavior: The individual innovative behavior of each respondent is measured by using a nine-‐item measure for innovative behavior of individuals, designed by Scott and Bruce (1994) and used by Janssen (2000). The different items are based on the three different stages of innovation. The first three items refer to the phase of idea generation; followed by three items on idea promotion and the last three items cover the steps of idea realization. The respondents gave an indication of how frequently they perform one of these activities during their workweek, for example the frequency of creating new ideas and mobilizing enough support for their innovative ideas. The answers could be given in a response format with a seven-‐point scale, ranging from
‘never’ to ‘always’. Scott & Bruce (1994) provided evidence for the validity of this innovative behavior scale, since they found a correlation between an objective measure of invention disclosure and a comparable innovative behavior scale.
Reward systems and stress: Chandler et al. (2000) described the effect of an
innovation-‐supportive organizational culture on innovative behavior. Evidence was found that smaller companies created a more innovation supportive culture, but there was no direct relationship between the employees’ performances and the innovation supportive climate they work in. The focus of the research was on the perceptions of supervisory support and the extent to which a reward system can be supportive to individual innovative behavior. In order to find the relationship between a rewarding system and the innovativeness of individuals, or willingness to become innovative, respondents were asked questions with respect to (changing) their individual innovative behavior in case of a rewarding system. A distinction is made between the respondents already enjoying a reward system at their current workplace and the respondents that are unfamiliar with such a system. Along with this rewarding of behavior comes more pressure put on individuals, as is described by Janssen (2004). A relation was found between innovative behavior and stress reactions, resulting in burnouts and job-‐related anxiety. In order to create a link between a reward system and stressfulness, a measure designed by Xie and Johns (1995) is used for job-‐related anxiety (short-‐term effects) and chronic psychological stress (long-‐term effects) as a result of innovative work behavior. Respondents were, among other things, asked to give an indication of how frequently they felt pressure to show innovative behavior and the effect of a reward in this.
Unfairness perceptions: The variable that gives an indication of the effect of
fairness perceptions on innovativeness, is based on a statement made by Janssen (2004), concluding that an unfair procedure of rewarding will result in more stress and a
negative attitude toward the system, this in turn would have a negative effect on individual innovative behavior. The respondents were asked to give an indication of how different statements on fairness applied to them. These statements about specific situations in the workplace were built on the fairness scale developed by Van Yperen et al. (2000), based on previous research on fairness done by Skarlicki & Folger (1997). Fairness of judgment of the individual’s work is here measured using seven items, including statements about the workload, rewards and the effect of a (un)fair judgment.
Labor contracts: The variable that measures the effect of different types of labor
contracts is based on the study of Eberhardt and Shani (1984), analyzing the effects of different types of labor contracts on the perceptions that employees have of the organizational climate. This study focused on the effects of different types of labor contracts on the attitude toward existing policies and the attitude toward co-‐operation and participating in decision-‐making. Based on this research, Ferris et al. (1996) designed a model that covers the effect of different human research practices on the employee’s attitude and behavior, affecting the individual’s innovativeness and effectiveness. This model is used to investigate whether for example an employee’s attitude toward risk-‐taking and co-‐operative behavior depends on the type of labor contract.
Cohesion: Lovelace et al. (2001) researched the effects of team compositions on
innovativeness of the members, based on an index designed by Teachman (1980). Following this index, Lovelace et al. (2001) focused on the intra-‐team task disagreements, communication and freedom to express doubts. In order to measure the cohesion among individuals and the effects on individual innovativeness, respondents were asked questions about the relation with direct colleagues and supervisors. The respondents were offered different statements about their current work situation with
respect to communication, cohesion and freedom to express opinions, based on Teachman (1980) and Lovelace (2001). For each statement an indication of frequency is given.
Cognitive styles: In order to measure the effects of cognitive styles of each
individual and the effects on innovative behavior, respondents were first given a short explanation about the two different types of innovators as described by Scott and Bruce (1994), namely adaptors and innovators. Subsequently, they were asked to think about whether they work more as an adaptor or whether they are truly innovative, by for example constructing new frameworks regularly. They could rank themselves on a horizontal line, going from a true adaptor on the left side, to a true innovator on the right side. Kirton (1976) researched the effects of characteristically and cognitive differences between individuals on innovative behavior. Based on a list of characteristics and behavior descriptions used by Kirton (1976), respondents were given 17 characteristics, ranging from intuitive to methodological, and were asked to what extent they possess each characteristic. By linking the characteristics of the adaptor and the innovator to the adaptor-‐innovator score, a relation might be found between the presences of personal characteristics and whether the respondents see themselves as the corresponding type of innovator (adaptor or true innovator). Besides that, the indicated presence of innovation enhancing characteristics can also be linked to the frequency of performing innovative activities indicated by the nine-‐item measure for innovative behavior of individuals (Scott & Bruce, 1994). By creating this link, it can be tested whether individuals are predestined to become either an adaptor or an innovator, based on characteristics.
Control variables: Different items are controlled for, namely gender, age,
the knowledge that an individual can draw on, the size of the company (measured in number of people) and whether they have a permanent or a temporary contract.
6 Analysis and Results
6.1 Factor Analysis and Ordinary Least Squares: Climate
A Factor Analysis is conducted in Stata 13 in order to validate our measures. All factor loadings on the created latent constructs can be found in parentheses after each item in the Appendix. Based on prior studies, the dependent variable Innovativeness is measured in order to capture the extent to which individual employees show innovative behavior, this nine-‐item scale measure was adapted from Scott & Bruce (1994). Based on the literature, it is expected that the factors that are created based on each category of questions would be related to the overall measure of innovativeness. Factor analysis simulated the intended factor structure for the measure of innovativeness, with one factor having an eigenvalue of 4 and with each item loading significantly on the intended factor, since all factor loadings were above 0.56.
In order to see what the effect of a rewarding system is on innovative behavior, the sample group has been divided into two different groups; respondents that already are currently experiencing a reward system and respondents who do not work with a reward system. The first group consisting of 22 individuals, was asked to indicate in what way their behavior has changed, the second group was asked to give an indicating of how their behavior could change as a result of a reward system, both based on a seven-‐ item scale. For the first group, a factor is created with an eigenvalue of 4.4 and with each items loading clearly on the factor. With an exception of one item with a factor
loading of 0.58, almost all items had a factor loading of around 0.85. Dropping that one question did not increase the overall scale reliability coefficient (α = 0.90) significantly and considering the question itself, it seems to be an important survey question. Out of the 82 respondents that answered the survey questions about rewarding innovative behavior, 60 employees answered not to work with a reward system. A factor created for this group of questions resulted in an eigenvalue of 3.1, however, one item loaded significantly lower than the rest and had a higher uniqueness. The scale reliability coefficient increased (α = 0,85) by dropping that one item, therefor the new factor is created based on 6 items.
To test hypothesis 1b, respondents were asked to answer eight questions about the level of stress they feel and about pressure they encounter to behave innovative. Loadings on this factor were relatively lower then the former formed factors. Tabachnick and Fidell (2001) assumed that a loading of 0.32 should be the minimum loading of an item. Taking a minimum of 0.40 in this research, four items had to be dropped since their loading was lower. By decreasing the number of items to four, the scale reliability coefficient increased up to 0.60.
In order to investigate if an unfair judgment of employees’ investments is related to their innovative behavior, the respondents were asked to answer seven questions. One clear factor resulted out of the analysis, with three items loading lower than 0.40; therefor these items are dropped. The created factor that accounts for fairness perceptions (α = 0.78) gives information about the effect of (un)fair judgments on employees’ working behaviors.
The factor with a scale reliability coefficient of 0.77 that is created in order to capture the effect of different types of labor contract consists of four items, since two items with very low loadings were dropped.
The last hypothesis within the expectation that the climate is the most important factor for encouraging individual innovative behavior covers the effect of the cohesion among colleagues. All seven items loaded on the intended factor, which means that the factor (α = 0.81) is created based on these seven items. Table 1 presents the means, standard deviations and correlations of the created factors.
Table 1: Means, Standard Deviations and Correlations
Variable Means S.D. 1 2 3 4 5 6 7 1. Individual Innovativeness 2.71 0.84 1 2. Reward = 1 6.43 0.89 0.52 1 3. Reward = 0 2.99 0.75 -‐0.05 . 1 4. Stress 5.38 0.76 0.22 0.49 0.26 1 5. Unfairness 2.90 0.77 0.16 0.29 0.12 0.40 1 6. Contracts 2.95 0.87 0.17 0.36 0.02 0.18 0.36 1 7. Cohesion 2.34 0.84 0.06 -‐.09 -‐0.06 0.08 -‐0.22 -‐0.25 1
The orthogonal rotated (varimax) factor variables were used to design Ordinary Least Squares (OLS) regressions for innovativeness. With the use of Innovativeness as a dependent variable and the the two variables concerning a reward system as independent variables, it is found that the respondent group already experiencing a reward system (indicated as Reward = 1 in the table) has a β-‐coefficient of -‐0.06 (R² = 0.27, p = 0.01) and the group that is not experiencing a reward system yet (indicated as Reward = 0 in the table), has a positive coefficient of 0.56. Where controlling for gender does not change coefficients meaningfully (β = -‐0.06, β = 0.58), controlling for age does,
however, only for the second group of respondents that does not experience a reward system (β = -‐0.06, β = 0.46). It is important to bear in mind that the first group is significantly smaller than the group that is not familiar with a reward system. When controlling for education, a slightly decrease in both variables is the result, namely β = -‐ 0.03 and β = 0.51. When it is taken into account that the number of years of experience might change the attitude toward a reward system, a change is seen in the coefficient for the second group, the value of β decreases to 0.47 (p = 0.05, R² = 0.33). Controlling for firm size does not show significant changes in the output for both respondent groups and all Variance Inflation Factors (VIFs), calculated for each regression in order to examine multicollinearity, had a value of around 1, which is below the cutoff of 10 that is set as a rule-‐of-‐thumb by Neter et al. (1990).
Since the theory by Janssen (2004) proves that the demanding of innovative behavior might result in more stress and feeling of pressure for employees, respondents were asked how they currently experience this. The coefficient for this variable is positive and significant (β = 0.24, p = 0.046). A regression analysis with the variable for both the group already receiving rewards for innovative behavior and the group that is not familiar with reward systems resulted in a change in the coefficient for stress in both cases (β = 0.29, β = 0.14). When controlling for gender, the coefficient does not differ significantly from the initial regressing output (β = 0.25, p = 0.04) and controlling for age only decreased the coefficient for the variable Stress slightly to a value of 0.23, the same holds for controlling for education level. Incorporating the control variables for experience and firm size results in coefficients of 0.21 and 0.26 with a p-‐value of 0.03. For the second hypothesis, concerning the effect of an unfair process of evaluating the investments made by individuals, the coefficient of the regression on the dependent variable Innovativeness of 0.18 is fairly low. Where incorporating the other
variables for reward systems did not have a noteworthy effect, including the variable Stress resulted in a more striking decrease of the coefficient for the variable Unfairness to 0.10, however the p-‐value is 0.058. When controlling for the effect of gender (β = 0.19), age (β = 0.16), type of education (β = 0.16), number of years experience (β = 0.15) and the size of the organization (β = 0.18), no striking effect in the coefficients were found. Again, all scores for VIFs were lower than 1.30.
The security of a permanent labor contract changes the effort of individuals in being, or becoming creative and innovative in the working place (Eberhardt & Shani, 1984). The coefficient of the variable for Contracts, based on four items, is positive and significant, but small (β = 0.17). The respondents were first asked to fill in if they have a permanent or temporary contract and were offered the same questions on how they feel about situations, regardless of the differences in contracts. Running the same regression, but only for the respondents that have the security of a permanent contract (63 observations), increased the coefficient up to 0.19. The coefficient for the regression with 19 respondents that work on the basis of a temporary contract resulted in a β-‐value of 0.07. This coefficient is very small, however, again the number of observations is small. No other combinations of independent variables that were added resulted in significant results; neither did the inclusion of control variables change the output significantly.
The last hypothesis within the first part of the research states that more cohesion among individuals will lead to more individual innovativeness (Teachman, 1980 & Lovelace, 2001). However, regression analysis showed an insignificant positive relation (β = 0.06, p = 0.59), correcting for heteroscedasticity did not improve it. The adding of other independent variables did not change anything with respect to the insignificance either; neither did the adding of control variables.
