PERCEIVED EXPERTISE DIVERSITY, INDIVIDUAL INNOVATION, AND THE MODERATING ROLE OF
TRANSFORMATIONAL LEADERSHIP
MASTER THESIS University of Groningen Faculty of Economics and Business
MSc Business Administration: Change Management
Lei Chen S2441659 Bitterstraat 22 8011 XL, Zwolle Phone: +31 06 49279414 Email: camille.chen1217@gmail.com
Supervisor Dr. H. Grutterink Second supervisor
Dr. J. Rupert
ABSTRACT
In this study, I raise the question whether transformational leadership can buffer the relationship between perceived expertise diversity and individual innovation. Moreover, I expect a positive relationship between transformational leadership and individual innovation. Data from 67 employees in a family business in Netherlands showed that transformational leadership was positively related to individual innovation. Moreover, perceived expertise diversity was positively related to individual innovation when transformational leadership was high, and there was no relationship between perceived expertise diversity and individual innovation when transformational leadership was low.
The findings indicate that transformational leadership can help individuals to make use of perceived expertise diversity to be innovative.
Key words: perceived expertise diversity, transformational leadership, individual innovation
CONTENTS
Abstract...2
Introduction... 4
Theoretical background...6
Perceived expertise diversity and individual innovation... 6
Transformational leadership and individual innovation...10
Transformational leadership as a moderator... 11
Method... 14
Sample and procedure...14
Measures...15
Factor analysis...18
Data analysis... 20
Results...20
Correlations and descriptive statistics...20
Hypotheses testing... 21
Discussion... 22
Main findings...22
Theoretical implications...23
Practical implications... 24
Limitations and future research...25
Acknowledgements... 27
References... 28
Appendix 1: Questionnaire...34
Appendix 2: Initial factor analysis...41
Appendix 3: Second step of factor analysis...42
Appendix 4: Final factor analysis... 43
INTRODUCTION
Innovation is regarded as one of the most pivotal factors for the development as well as the competitive advantage of a company (Dess & Picken, 2000; Tushman & O’Reilly, 1996). Therefore, how to improve individual innovation has become an important challenge for many organizations. In order to enhance innovation, more and more organizations employ teams composed of members with diverse expertise to finish complicated tasks (Van der Vegt, Bunderson, & Oosterhof, 2006). The idea is that team members who differ in the types of expertise they possess are more likely to generate different ideas, thus providing more opportunities for them to learn new ways of thinking and come up with innovative ideas. However, both theory and practice show that expertise diversity may not always be beneficial for the individual innovation of team members and that findings on the relationship between expertise diversity and individual innovation are mixed.
On the one hand, one could expect that in an expertise diverse team, more debate on the same problem is likely to be generated because the team members will voice different opinions based on their different knowledge, skills, abilities and experience (see, for example, Simons, Pelled, & Smith, 1999, for a similar reasoning). In such situations, some team members can take other people’s ideas into consideration and re-think their original perspectives. In this process, team members learn new things and absorb new ideas from the exposure to different types of experience, knowledge and skills, and in turn, this may improve the level of individual innovation of team members.
On the other hand, expertise diversity within a team may also hamper innovation. An expertise diverse team may generate many divergent ideas, which can lead to debates among team members.
And these debates may generate difficulties in communication and coordination among group members (Williams & O'Reilly, 1998), dilemmas of idea integration (O'Reilly, Caldwell & Barnett, 1989) and job dissatisfaction (Jackson, Brett, Sessa, Cooper, Julin, & Peyronnin, 1991; Wagner, Pfeffer,
& O'Reilly, 1984). These negative results may generate chaos and conflicts among team members, and decrease employees’ motivation as well as innovative behaviors during work.
An expertise diverse team has an enormous potential to influence individual innovation, both positively and negatively. It has large amounts of divergent perspectives because team members come from different backgrounds and functional areas with different knowledge, skills and abilities.
If team members are willing to learn from each other, the different ideas can be beneficial resources for them to improve individual innovation (Faraj & Sproull, 2000). However, if the divergent ideas among team members generate debate, conflicts and communication difficulties among team members, they would not learn new ideas from others, thus decreasing innovation. Therefore, how to control or leverage this potential has become a critical task for the leader of an expertise diverse
team. Below I propose that the outcomes of a team depend on whether a team leader can manage the diverse perspectives of team members successfully.
Research has shown that transformational leadership is an important factor that can promote innovation and creativity (Bass & Avolio, 1994; Jung, Chow, & Wu, 2003). Transformational leaders are charismatic or visionary individuals who want to challenge the current situation and create radical change (Burn, 1978). Some components of transformational leadership can be expected to decrease the potential negative influences of expertise diversity on individual innovation. For example, according to the propositions of many transformational leadership behaviors (Bass, 1985;
Bennis & Nanus, 1985; Boal & Bryson, 1988; Burns, 1978; Conger & Kanungo, 1987; House, 1977), leaders who articulate a clear and challenging vision can positively influence employees’ job satisfaction by providing individual team members with more clarity about the central goals and direction of the team. Moreover, through providing an appropriate model, transformational leaders can improve trust and solve conflicts among team members (Podsakoff, Todor, Grover, & Huber 1984). Therefore, it is meaningful to investigate whether transformational leadership can buffer the potential negative effects generated by expertise diversity on team members’ individual innovation.
In other words, in the present thesis I will examine whether transformational leader of an expertise diverse team can help employees to improve individual innovation.
My thesis aims to make three important contributions to the extant literature. First, many studies have investigated objective differences in expertise, including differences in job styles, experiences and educational backgrounds (e.g., Randel & Jaussi, 2003; Van der Vegt, et al., 2003). However, these studies have neglected the subjective side of people that individuals may have different perceptions based on the same objective difference (Oosterhof, 2008). Studying this is important because people’s perceptions of expertise diversity are more likely to affect their attitudes and behaviors than the objective expertise diversity (Turner et al., 1987, Oosterhof, 2008). So in this study, I focus on perceived expertise diversity, which is, individual team members’ perceptions of expertise diversity within their team.
Second, the individual level outcomes generated by perceived expertise diversity are neglected by most of previous scholars because they prefer to move their focus from the individual level to higher level outcomes (e.g., team level, organizational level) (Oosterhof, 2008). Nevertheless, team level outcomes may overlook the fact that team members may have different perceptions of expertise diversity of others in the team. Also, different perceptions can make team members perform differently. That’s why sometimes members in an expertise diverse team are willing to help each other, and thus leading to perfect team outcomes, and sometimes they react negatively to each
other, leading to negative team outcomes (Oosterhof, 2008). Therefore, it is meaningful to study individual level outcomes produced by perceived expertise diversity, because it will contribute to the reasons of different team outcomes.
Third, in spite of the currently popular investigations and studies about diversity (e.g., Hobman, Bordia, & Gallois, 2004; Harrison, Price, Gavin, & Florey, 2002) and transformational leadership (e.g., Bass & Riggio, 2006; Bass, 1985; Bennis & Nanus, 1985), a gap still exists in both literatures because most previous scholars only investigated both literatures separately instead of the interaction between them. Moreover, how “transformational leadership affects the balance between the negative and the positive effects spawned by team diversity is underdeveloped” (Kearney & Gebert, 2009, p. 77). In this study, the aim is to investigate whether transformational leadership can buffer the influences of perceived expertise diversity on individual innovation. I will test these ideas in a survey among a sample of 67 employees from a company specialized in paintings in the Netherlands.
The results of my thesis will help to improve theoretical knowledge with regard to expertise diversity and transformational leadership. Moreover, it provides practical insights for managers with regard to selecting and training leaders of expertise diverse teams to improve individual innovation within teams.
THEORETICAL BACKGROUND
PERCEIVED EXPERTISE DIVERSITY AND INDIVIDUAL INNOVATION
According to Van der Vegt, et al. (2006), most studies on expertise diversity define it as the different domains of expertise possessed by the individual members of a work team. In other words, they define expertise diversity as the different knowledge, skills and abilities owned by employees resulting from their educational backgrounds and experience. Moreover, many scholars (e.g., Jehn, Chadwick & Thatcher, 1997; Smith et al., 1994; Randel & Jaussi, 2003; Van der Vegt et. al., 2003) distinguish between expertise diversity at the team level and the individual level. At the team level, expertise diversity is conceptualized as a characteristic of a team that describes the extent of team members’ differences in expertise, these differences can be both objective and subjective (Van Knippenberg & Schippers, 2007). At the individual level, expertise diversity is often referred to as expertise dissimilarity which is defined as the extent to which one specific member differs from other members in expertise of the team (Oosterhof, 2008).
A lot of the abovementioned studies about expertise diversity investigated objective differences in expertise, including differences in jobs, experiences and educational backgrounds (e.g., Randel &
Jaussi, 2003; Van der Vegt, et al., 2003). Although this objective information may seem “hard” data, these studies overlook the subjective side, that is, the fact that people may have different
perceptions of these differences (Oosterhof, 2008). Nevertheless, research has shown that, compared to objective differences in expertise, perceptions of expertise differences can especially influence people’s attitudes, and, in turn, behaviors (Turner et al., 1987, Oosterhof, 2008). For example, if an individual thinks other people have similar characteristics as him or herself, he or she is more likely to react positively to these people. On the other side, the perception that others are different may make an individual react negatively, leading to communication problems, and problem solving difficulties (Turner et al., 1987). Differently, the measurement of objective differences in expertise assumes that the expertise differences between different categories are same (cf., Tsui, Egan, & O’Reilly, 1992), for example, the extent of difference between a member with a technical background and a member with a business background is equally big as that between a member with a technical area and a member with a chemical area. This measurement ignores the “deep-level diversity” (Harrison, Price, Gavin, & Florey, 2002) in expertise, such as people’s feelings and perceptions of expertise differences among each other. However, ignoring perceptions of expertise diversity is a problem, because they are more likely to influence individuals’ attitudes and behaviors than objective expertise differences (Turner et al., 1987, Oosterhof, 2008). So just focusing on objective expertise differences will overlook the real and accurate effects from expertise diversity on individuals.
Moreover, several scholars have criticized the measurement of objective differences in expertise diversity studies, because the measurement ignores people’s different awareness of these objective differences. For example, if people know more about their teammates, they will think the differences between them is less significant (Harrison, Price, Gavin & Florey, 2002; Hobman, Bordia & Gallois, 2004), although the objective differences of expertise among them are still the same. So, compared to objective expertise differences, the perceptions of expertise differences can reflect and predict the real and accurate differences among each other better. Therefore, in this study, I will investigate perceived expertise diversity, and I will define perceived expertise diversity as the perceptions or awareness individuals have of the differences in expertise possessed by other individuals in their team (Oosterhof, 2008).
In this study, I conceptualize individual innovation based on the article of West and Farr (1989) as one’s intentional behaviors to produce, improve and realize his or her own new ideas during work.
Janssen (2000; 2001) and Scott & Bruce (1994) argue that individual innovative behaviors are not singular or simple behaviors, instead, they are composed of three steps which are idea generation, idea promotion and idea realization. Idea generation is the first step of individual innovation. In the idea generation step, people have the freedom to produce new, creative, novel and useful ideas by
Lazenby & Herron, 1996; Kanter, 1988; Woodman et al., 1993). Following that, the idea promotion step is implemented. This step aims to find approaches to support these creative ideas, which is also the preparation for idea realization. People who generate ideas may try to find friends, sponsors and supporters who have the ability and power to make these ideas proceed (Galbraith, 1982; Kanter, 1988). Finally, the idea realization step will be carried out to make these ideas perform their usefulness in real working place. It is a process to transfer invisible ideas to application behaviors and beneficial outcomes which are visible (Kanter, 1988).
Findings and theories regarding the relationship between perceived expertise diversity and individual innovation are rather ambiguous: sometimes expertise diversity in a team can lead to positive results or performance and sometimes negative. Social identity theory (Tajfel & Turner, 1986), self- categorization theory (Turner et al., 1987) and similarity attraction paradigm (Byrne, 1971) can explain the negative effects, in other words, these theories can describe why perceived expertise diversity can hamper individual innovation. On the other side, self-expansion theory (Aron, McLaughlin-Volpe, Mashek, Lewandowski, Wright, & Aron, 2004) and self-evaluation maintenance theory (e.g., Tesser & Campbell, 1982) can help illustrate the positive effects, that is, why perceived expertise diversity can improve individual innovation
Self-categorization theory (Turner et al., 1987) argues that, when individuals in a team perceive themselves dissimilar in expertise from other team members, they will intuitively categorize themselves and others in separate groups. Thus, they are likely to attribute negative characteristics to those who are in other groups from themselves, in turn, they will react negatively to those out- group members (Turner et al., 1987). Therefore, debate is easily generated among team members.
These debates can lead to conflicts and chaos (Webber & Donahue, 2001) as well as mutual confrontation (Williams & O'Reilly, 1998) among team members. Moreover, the conflicts can decrease team members’ psychological safety during work (Edmondson et al., 1999), which may be negative for employees’ passion for work. All the above detrimental effects will cause problems in innovation process, because it is hard to learn from each other if there are debates among team members.
Similar to self-categorization theory, social identity theory (Tajfel & Turner, 1986) predicts that those who think they are dissimilar or have different characteristics will perceive themselves in different groups. According to this theory the members within the team will perform negatively to each other if they perceive others different in expertise. For example, they are less likely to trust each other, and not willing to communicate with each other. In this case, perceived expertise differences among individuals will cause problems in communication and integration of different ideas (Williams &
O'Reilly, 1998). Thus, individual innovation will be impeded because they are not able to absorb fresh or creative ideas from others.
Byrne’s (1971) similarity attraction paradigm supports that perceived similarities on several attributes among each other can improve interpersonal attraction and mutual liking. So positive outcomes will be generated. For example, they are more willing to be friends and talk with each other, and they are willing to listen to each others’ opinions and ideas. However, if team members have the perception that they are not similar to each other in expertise, they will intuitively have negative attitudes and behaviors. Gradually, working environment will become unfriendly and job dissatisfaction (Jackson et al., 1991; Wagner et al., 1984) will be generated. Moreover, too many negative reactions and performances in a team can make team members stressful (O'Reilly et al., 1989; Schneider, 1987; Tsui & O'Reilly, 1989; Wagner et al., 1984). Job dissatisfaction and work pressure can decrease employees’ enthusiasm for work, so they will not work as passionately and innovatively as before, thus, individual innovation will be impeded.
From the above three aspects, we can find that perceived expertise diversity can hamper individual innovation. However, perceived expertise diversity can also have positive influences on individual innovation. Self-expansion theory (Aron, McLaughlin-Volpe, Mashek, Lewandowski, Wright, & Aron, 2004) argues that the most pivotal motivation for people to realize goals is to get different kinds of resources, such as money, social connection and expertise. Therefore, if people perceive the expertise differences among team members, they are likely to communicate with others and learn from them. That is a good way to acquire resources, which are different ideas, knowledge, skills and perspectives from those specialized in different expertise. In this process, people will know fresh ideas and perspectives, in turn, those ideas will make them rethink their original thoughts and enrich their way of thinking. That will improve their individual innovation during work.
Moreover, self-evaluation maintenance theory (e.g., Tesser & Campbell, 1982) supports that people tend to keep a positive evaluation of themselves, that is they want to continue to improve themselves to make sure they are satisfied with themselves. Also, other people’s characteristic and feature, such as expertise, will influence their self-evaluation. For example, in a team, if a member finds that other team members have outstanding expertise that he is not familiar with, he will perceive his self-evaluation threatened by their outstanding accomplishments (Wills, 1981).
Therefore, he will learn from others to improve himself (Oosterhof, 2008). With more touch to a different expertise which they don’t know well, individuals can perceive the improvements and enrichment of themselves, in turn, they will maintain good self-evaluation. Consistently, Pilkington, Tesser, & Stephens (1991) argue that individuals really appreciate the differences in expertise from
other people, and they have the motivation to learn from those who are experts in other areas which they are not familiar with. During the communication and cooperation process, individuals will know more than previously. That is a good approach to absorb new ideas and improve individual innovation. Some empirical studies (Ancona & Caldwell, 1992; Bantel & Jackson, 1989; Glick et al., 1993) also support this kind of results. For example, Ancona & Caldwell (1992) examined 45 product teams and found that expertise diversity can positively influence innovation because of the increasing frequency of communication with people with different ideas.
In sum, social identity theory (Tajfel & Turner, 1986), self-categorization theory (Turner et al., 1987) and similarity attraction paradigm (Byrne, 1971) support the negative relationship between perceived expertise diversity and individual innovation, while self-expansion theory (Aron et al., 2004) and self-evaluation maintenance theory (e.g., Tesser & Campbell, 1982) argue the positive relationship. Therefore, the relationship between perceived expertise diversity with individual innovation seems conditional. In other words, a moderator of the relationship between the two factors needs to be found.
TRANSFORMATIONAL LEADERSHIP AND INDIVIDUAL INNOVATION
The concept of transformational leadership was first introduced into organization literature by Bass (1985) based on Burns’ (1978) distinction between transformational and transactional leadership.
According to Bass (1985), transformational leadership can be defined as a kind of leadership that focuses on building an emotional connection between leader and followers. Transformational leaders encourage their followers by articulating a vision, providing an appropriate model, fostering the acceptance of group goals, high performance expectations, providing individualized support and intellectual simulation (Avolio & Bass, 1988; Bass, 1985; Bass et al., 1987; House, 1977; House et al., 1991), in order to make their followers do their best and perform beyond expectations (Avolio & Bass, 1988).
Through articulating a vision, providing an appropriate model, and fostering the acceptance of group goals, transformational leaders spread common values, faith, and believes throughout the team, show respect to every individual and forward a sense of mission to their followers (Hater and Bass, 1988). By the leaders’ charismatic influence, followers will be motivated to work hard, perform beyond expectations and achieve higher work goals (Amabile et al., 1996; Amabile et al., 2004; Jung et al., 2003). It is a process to seek novel ways and approaches to perform better than expectation for individuals. In this process, individual innovation will be improved.
Through high performance expectations, a transformational leader uses emotional connections to
encourage the followers to achieve better performance based on central aims instead of their own self-interests (Cheung & Wong, 2011). It means that followers will consider that the organizational or team goal is more important than their own gains and losses. In order to perform better than expectation, individuals will not follow the normal ways to finish tasks, instead, they will try to find novel ways to do their work more efficiently and effectively. In this process, employees are likely to generate creative ideas, and find ways to make what they think into practice, so that leaders can see their better performance. Thus, transformational leadership provides a working environment in which individuals have more opportunities and motivations to perform innovatively.
Furthermore, through individualized support, a transformational leader promotes learning, provides guidance and treats each follower as an individual (Hater and Bass, 1988). Therefore, employees will perceive that the leader emphasizes the developments of themselves, and thus, they will try their best to achieve excellent performances in their work. They will focus more on learning new ways to work and improve their capabilities based on the leader’s guidance. Thus, individuals are stimulated to “think out of the box” (Jung, et al., 2003) and achieve higher levels of individual innovation.
Finally, through intellectual stimulation, a transformational leader encourages followers to think in unconventional ways (Hater and Bass, 1988). Employees will be motivated to see the world with a skeptical view, and seek new ways to fulfill their curiosity (Bass, 1985). Therefore, individuals are more likely to freely generate, promote and implement new ideas by the influence of intellectual stimulation. From the above six dimensions of transformational leadership, individual innovation can be expected to be improved by this kind of leadership. Therefore, the first hypothesis is:
Hypothesis 1: Transformational leadership will be positively related to individual innovation
TRANSFORMATIONAL LEADERSHIP AS A MODERATOR
As illustrated before, perceived expertise diversity may have both positive and negative effects on individual innovation. An expertise diverse team has large amounts of potentials to generate different ideas (Hoffman & Maier, 1961; McLeod & Lobel, 1992; Watson, Kumar, & Michaelsen, 1993, Simons et al., 1999), because its members are likely to have diverse perspectives as a result of their different backgrounds, knowledge, skills and experiences. On the one side, if team members combine the resources of their expertise diverse team and integrate each other’s ideas, individual innovation can be promoted in this idea exchange process. On the other side, if they are not willing to accept others’ ideas or suggestions, these negative reactions will lead to difficulties in communication and idea integration (Williams & O'Reilly, 1998), conflicts (Webber & Donahue, 2001) and mutual confrontation (Williams & O'Reilly, 1998) among team members, job dissatisfaction and
work pressure (Jackson et al., 1991; Wagner et al., 1984).
As the most popular and effective kind of leadership (Bass & Riggio, 2006), I expect that transformational leadership may have the potential to buffer the potential negative effects (e.g., conflicts and mutual confrontation; communication difficulties and integration difficulties; job dissatisfaction) of perceived expertise diversity on individual innovation. Transformational leaders can buffer conflicts and mutual confrontation by fostering the acceptance of group goals, reduce difficulties in communication and idea integration among team members by articulating a vision and providing an appropriate model, and decrease employees’ job dissatisfaction by providing individual support.
First, transformational leaders can help solve conflicts and mutual confrontation among team members generated by perceived expertise diversity. By fostering the acceptance of group goals, transformational leaders will positively influence employees’ attitudes and goal clarity (Bass, 1985;
Bennis & Nanus, 1985; Boal & Bryson, 1988; Burns, 1978; Conger & Kanungo, 1987; House, 1977). If employees can identify the goal of the group clearly, they will not just focus on the argumentation about why others do not agree with their own ideas. In addition, employees will think more about how to achieve group goals during work, and they are more likely to cooperate with each other to finish group work. Thus, conflicts and mutual confrontation generated by perceived expertise diversity will be decreased by the influence of transformational leadership. In turn, team members are more likely to communicate ideas with each other and work innovatively.
Second, transformational leaders can buffer the difficulties of communication and idea integration among team members in an expertise diverse team. By articulating a vision and providing an appropriate model, transformational leaders will give their team members a direction to follow. At the same time, transformational leaders will work consistently with the values, beliefs and spirits they have spread through the whole team. These behaviors as a role model can reinforce team members’ commitment to the leader and to the whole group (Bass and Riggio, 2006). Based on the commitment and trust for the transformational leader, team members will feel psychologically safe during work (Edmondson et al., 1999). Gradually, the psychological safety will generate a friendly working environment, which is beneficial for frequent communication and idea exchange. Therefore, team members can integrate their ideas easily by the regular communication with each other. So individual innovation will be improved in the idea integration process.
Moreover, transformational leaders can help solve work pressure and job dissatisfaction generated by perceived expertise diversity among team members. Under huge work pressure and job dissatisfaction, employees will lose passion for work, in turn, innovative performance during work.
Transformational leaders can solve these problems by providing individual support. They focus on employees’ personal needs and wants, and provide necessary information and resources to help employees finish task successfully (Bass, 1985; Bass & Avolio, 1994). Therefore, the employees will feel free to express their feelings and perspectives because they know that their leader will help and support them (Yammarino, 1990; Podsakoff et al., 1990). In this case, the leader’s encouragement and support will make employees more satisfied and less stressful towards their job. Thus, they will work as innovatively as before.
In conclusion, the negative effects (i.e., conflicts, communication difficulties) of perceived expertise diversity on individual innovation will be buffered by high transformational leadership. However, when a team leader scores low on transformational leadership, perceived expertise diversity among team members can both reinforce and impede individual innovation. In a team, some members may be willing to learn from those with different expertise, because they want to maintain positive self- evaluation or get more resources to expand themselves. While some members may refuse to learn from others who are perceived to have different expertise from themselves, because individuals may think that others are not attractive and not in the same group as themselves. Moreover, it is really hard to predict whether those who are willing to learn from each other can successfully motivate others to open themselves for different ideas. Also, it is difficult to expect whether those who are not open for new ideas will negatively influence others’ passion to learn and improve themselves.
Because it depends on the characteristics, e.g., perceptions, feelings and personal charm, of people, which have no regulations or rules to predict. Therefore, I predict when transformational leadership is low, the positive outcomes and negative outcomes from perceived expertise diversity on individual innovation are equal. The reasoning leads to hypothesis 2:
Hypothesis 2: transformational leadership moderates the relationship of perceived expertise diversity with individual innovation, such that perceived expertise diversity is positively related to individual innovation with high levels of transformational leadership, yet unrelated to individual innovation with low transformational leadership.
Below is the research model.
H2 H1
Figure 1: research model
METHOD
SAMPLE AND PROCEDURE
The sample consisted of 67 employees in an independent family-owned painting company---Van Wijhe Verf--- which is located in Zwolle, Netherlands. The company is the largest independent producer of decorative paints in Netherlands. It already has sold products to 24 countries in Europe and is currently extending its business to Asia. There are 184 employees working in the company, divided into 26 departments. Moreover, there are three main levels in the organization, which are general employees (137 people), middle management level and top management level (47 people).
As the majority of the company are general employees and the number of employees from management teams is not big enough to collect data, in the study I focused on general employees. So the middle management team and top management team were excluded. Those who worked as temporary workers were excluded. Also, those who did not have email address were excluded, because they worked in a venue (without computers) for producing and applying paintings. Out of the 26 departments, 15 departments were chosen based on consideration of sample quality, from which 90 persons were asked to fill in the questionnaire. Due to hierarchy of the company as well as personnel populations, each chosen department consisted of only one team and thus one team leader, who was the director of the department. The members, led by this leader, interacted frequently and worked inter-dependently for common goals. For example, all the members in the marketing department worked together to get a good marketing strategy for some certain products.
So in my study, a department was treated as a team. Out of the selected 90 people, 71 completed Transformational leadership
Perceived expertise
diversity Individual innovation
the questionnaire (78.9% response rate). Unfortunately, 4 responses could not be used because they filled the same answer for most or even all the questions in the survey. Thus, the final number of valid questionnaires was 67.
Out of this final sample of 67 respondents, 43 were male (64.2%) and 24 were female (35.8%).
Regarding the educational level, about 38.8% were MBO, 17.9% were HAVO, 25.4% were HBO and 13.4% had obtained a bachelor diploma. The average age of the employees was 39.92 years (SD=8.60). 34.3% of the employees had a technical educational background, 26.9% had an economic background, 9% had a business administration background, 4.5% had a language/culture background, 1.5% had a medicine/nursing background, 1.5% had a social science background, 1.5% did not have a background and 17.9% had other educational backgrounds.
MEASURES
The original questionnaire was developed in English and distributed among the employees. However, many employees indicated that they did not understand English well enough to complete the survey.
Therefore, I asked several Dutch native speakers who had excellent English skills to help me translate English into Dutch, so that both Dutch and international employees in the company could participate in the research. The Dutch version was back translated by three Dutch native speakers, and in order to ensure the consistency between the original English version and the translated Dutch version, another Dutch-speaker translated the Dutch version to English version. Minor inconsistencies were discussed by all four translators and the final Dutch questionnaire was slightly modified. Out of the 67 respondents, 35 filled out the online survey in English, 16 completed the online survey in Dutch, and 16 filled in the Dutch questionnaires on paper.
Table 1
Descriptions of dimensions of all the dependent and independent variables Six dimensions of transformational leadership (Podsakoff et al., 1990) Articulating a vision TL 1, TL 2, TL 3, TL 4, TL 5 Providing an appropriate model TL 6, TL 7, TL 8
Fostering the acceptance of group goals TL 9, TL 10, TL 11, TL 12 Individualized support TL 13, TL 14, TL 15, TL 16 High performance expectation TL 17, TL 18, TL 19 Providing individualized support TL 20, TL 21, TL 22 Three dimensions of individual innovation (Kanter, 1988)
Idea generation IN 1, IN 2, IN 3
Idea promotion IN 4, IN 5, IN 6
Idea implementation IN 7, IN 8, IN 9
Perceived expertise diversity (Campion et al., 1993; Ellemers et al., 1999)
Campion et al. (1993) EX 1, EX 2
Ellemers et al. (1999) EX 3
TL 1-22, IN 1-9 and EX 1-3 can be found in the questionnaire in Appendix 1
Transformational leadership was originally measured by the twenty-two-item scale from Podsakoff et al’s (1990) transformational leadership behavior inventory with 6 dimensions (see table 1 and Appendix 1). Then, I followed Van der Kam, Janssen, Van der Vegt, & Stoker’s (2014) approach to test transformational leadership. They chose 6 items which were the highest loading items for each of the six dimensions of transformational leadership. These items were: Will not settle for second best (High performance expectations), My leader inspires others with his/ her plans for the future (Articulating a vision), My leader leads by example (Providing an appropriate model), My leader develops a central attitude and spirit among his/her employees (Fostering the acceptance of group goals), My leader shows respect for my personal feelings (Individualized support), and My leader has stimulated me to think about old problems in new ways (Intellectual stimulation). However, the item “Will not settle for second best” was replaced by another item “My leader shows us that he/she expects a lot from us” under the same dimension (High performance expectation). The reason was illustrated in factor analysis section. Then, the six items (with the replaced item) were combined into the variable
transformational leadership. I used a response format ranging from 1 (strongly disagree) to 5 (strongly agree). The Cronbach alpha was .80.
Individual innovation was measured using 9-item scale of Kanter (1988) originally. There were three steps of individual innovation, which were idea generation, idea promotion and idea implementation, and each step was measured by 3 items (Kanter, 1998) (see table 1 and Appendix 1). However, 6 items illustrating idea generation and idea promotion steps were deleted, reasons of which could be found in factor analysis section. The three remaining items (“transform innovative ideas into useful applications”, “introduce innovative ideas into the work environment in a systematic way” and
“evaluate the utility of innovate ideas”) representing idea implementation were combined into the variable individual innovation. The response format ranges from 1 (never) to 5 (always). The Cronbach alpha was .81.
Perceived expertise diversity was originally measured by 2 items from Campion et al. (1993) and 1 item from Ellemers et al. (1999) (see table 1 and Appendix 1). Campion et al. (1993) used three items to test the team members’ heterogeneity in expertise and Ellemers et al. (1999) used three items to test perception of expertise diversity. However, one item from Campion et al. (“I think the members of my department have skills and abilities that complement with each other”) was more about the perceived expertise complementarity than perceived expertise diversity, so it was deleted. Moreover, one item from Ellemers et al. (“I think the members of this department each have expertise in different domains”) was same as an item from Campion et al. (“I think the members of my department vary widely in their areas of expertise”); one item from Ellemers et al. (“I think each of the team members has specialized knowledge about a part of the team task”) was part of their another item: “I think each team member has knowledge about parts of the team task that no other team member has”. Then, three items extracted from both articles were used to test perceived expertise diversity. The response format ranged from 1 (strongly disagree) to 5 (strongly agree).
However, one item (“I think each team member has knowledge about parts of the team task that no other team member has”) was deleted in factor analysis section. The remaining two items (“I think the members of my department vary widely in their areas of expertise”, “I think the members of my department have a variety of different backgrounds and experiences”) were combined into the variable perceived expertise diversity (α= .67).
Control variables. Previous studies showed that gender, tenure (e.g., Drach-Zahavy & Somech, 2001;
Watson, Kumar & Michaelsen, 1993; Mumford & Gustafson, 1988), and task interdependence (Van der Vegt & Janssen, 2003) could influence innovative behaviors. So I included gender, organizational tenure and task interdependence as control variables in my study. I measured task interdependence
with 5 items ranging from 1 (strong disagree) to 5 (strong agree) based on Van der Vegt & Janssen’s (2003) study. The five items are: I need information and advice from the fellow members in my department to perform my job well, I have a one-person job; it is not necessary for me to coordinate or cooperate with my fellow members in my department, I need to collaborate with the fellow members in my department to perform my job well, the fellow members in my department need information and advice from me to perform their jobs well, I regularly have to communicate with the fellow members in my department about work-related issues. The Cronbach’s alpha of task interdependence was .78 after I deleted the item (I have a one-person job; it is not necessary for me to coordinate or cooperate with my fellow members in my department), which displayed a minus corrected item-total correlation to this construct. Moreover, organizational tenure was measured as the time an employee had worked in this company. The average organizational tenure was 11.85 years (SD= 7.40).
FACTOR ANALYSIS
In order to test whether the items from transformational leadership, individual innovation and perceived expertise diversity in my model were really three different constructs, an exploratory factor analysis (EFA) using direct oblimin rotation was performed in SPSS 21. In the initial factor analysis, the 6 items (Van der Kam et al., 2014) for transformational leadership, the 9 items (Kanter, 1988) for individual innovation and the 3 items (Campion et al., 1993; Ellemers et al., 1999) for perceived expertise diversity were included. So there were 18 items in all for the initial EFA. However, from the results of SPSS, five factors were extracted instead of the expected 3 (see Appendix 2). Then, some items were deleted and one item was replaced, reasons of which are provided and discussed below.
First, the item (create new ideas for improvements) was deleted because it had a cross loading. Also, it seemed to be measuring whether employees could get improvements rather than new ideas. Then, two items (mobilize support for innovative ideas; acquire approval for innovative ideas) were deleted because they loaded on the same factor as most of transformational leadership items. These items seemed to be measuring individualized support and approval from transformational leaders, instead of idea promotion.
After that, factor analysis was rerun. According to the results (see Appendix 3), the item (will not settle for second best) from transformational leadership did not have a loading higher than .30 under any factor, while the other five items from transformational leadership loaded under the same factor.
Upon closer inspection of the item, I expected that the formulation of this item might have lead to misunderstanding, because participants might think that the leader would not settle for less.
Therefore it was replaced by another item (my leader shows us that he/she expects a lot from us) under the same dimension, that is high performance expectation. This item had a good loading under the same factor with other five items from transformational leadership (see Appendix 4). Moreover, it included the meaning that high performance was expected from every team member, which was consistent with theories (Bass, 1985).
Furthermore, 2 items (search out new working methods, techniques, or instruments; generate original solutions to problems) of individual innovation were deleted because they had low loadings from .40 to .50, while others were at an acceptable level (>.50) (see Appendix 3). Both of them were not straight forward enough to test idea generation, so that misunderstanding could be produced.
These items seemed to test both generating new ideas and finding new working ways and problem solving abilities, leading to several interpretations. Out of the 6 items testing idea generation and idea promotion, 5 items were deleted, so only the three items testing idea implementation were retained completely. Therefore, I wanted to just focus on idea implementation of individual innovation, not only because of the results of factor analysis, but also because this dimension matches the organizational culture and the operational way of this company. The team leaders in this organization prefer to see the visible implementation and beneficial outcomes when the team members have innovative ideas or inspirations. For example, marketing employees always work out a website for the new project and a story for the new product development, when they have fresh ideas. And leaders also like and support their working way. Other employees work in the same way.
So focusing on the idea implementation is something inherent in the organizational culture.
Therefore, the only item left to test idea promotion (make important other organizational members enthusiastic for innovative ideas) was deleted. As a result, only 3 items tested individual innovation in this study.
With regard to perceived expertise diversity, the item (each member in my department has knowledge, skills and abilities about part of the total task that no other member has) for perceived expertise diversity was also deleted, because it loaded on a separate factor (see Appendix 3). The item consisted of two parts, knowledge and task, and it seemed to test perceived task diversity instead of perceived expertise diversity. Therefore, this item was excluded from the perceived expertise diversity scale.
The final solution for factor analysis included 3 factors (see Appendix 4). The 3 extracted factors together explained 63% of variance, and all of them had an Eigenvalue higher than 1. KMO-SMA is .709, which is higher than the 0.6 limit (Kaiser, 1974). Bartlett’s test of Sphericity is significant (.00), meaning that correlations between items were significantly large for EFA (Field, 2013).
DATA ANALYSIS
Before performing a hierarchical linear regression analysis, all the control variables and independent variables were standardized. In the first step, the standardized control variables (gender, organizational tenure and task interdependence) were entered into the model. Then, in the second step, standardized perceived expertise diversity and standardized transformational leadership were entered into the model. Finally, the interaction term, which was the product of standardized perceived expertise diversity and standardized transformational leadership, was entered in the third step.
RESULTS
CORRELATIONS AND DESCRIPTIVE STATISTICS
In Table 2, the means, standard deviations and bivariate correlations among the variables in this study were presented. There was a positive relationship between transformational leadership and individual innovation (r= .46, p< .01). So the more the leader is transformational, the more innovative his/her follower will be. Organizational tenure had a negative relationship with individual innovation (r= -.25, p< .05). In other words, the longer an employee has worked in the company, the less innovative he/she will be. Gender had a positive relationship with perceived expertise diversity (r= .25, p< .05). I coded 1 as male, and 2 as female, meaning that women can perceive more diversity in expertise than men. Moreover, the relationship between perceived expertise diversity and individual innovation was positive (r= .27, p< .05).
Table 2
Univariate statistics and Pearson's correlations.
Variable(n=67) M SD 1 2 3 4 5
1. Gender 1.36 .48
2. Organizational tenure 11.85 7.40 -.18
3. Task interdependence 3.82 .77 -.17 .11
4. Perceived expertise diversity 3.57 .88 .25* .03 -.09
5. Transformational leadership 3.42 .77 -.05 -.18 .12 .25*
6. Individual innovation 2.98 .95 -.10 -.25* .05 .27* .46**
* p< .05. ** p< .01.
HYPOTHESIS TESTING
The results of the regression analysis in table 3 showed that the first step with the control variables did not significantly predict individual innovation (ΔR²= .10, ΔF= 2.23, n.s.). Out of the three control variables, only organizational tenure had a significant relationship with individual innovation (b= -.27, t= -2.35, p< .05). In other words, organizational tenure was negatively related to individual innovation. In step 2, perceived expertise diversity and transformational leadership were added, displaying a significant relationship with individual innovation ( Δ R ² = .19, Δ F= 7.69, p< .01). As expected, transformational leadership was positively related to individual innovation (b= .31, t= 2.74, p< .01). Therefore, H1 was confirmed.
H2 predicted a significant interaction effect between perceived expertise diversity and transformational leadership on individual innovation. As expected, after the interaction term was added into the equation in step 3, the interaction effect was significant (ΔR²= .05, ΔF= 4.28, p< .05).
Table 3
Results of regression analysis (n=67)
Step Variable Individual innovation
1 2 3
1 gender -.16 -.19 -.25*
organizational tenure -.27* -.23* -.22*
task interdependence .06 .03 .10
2 perceived expertise diversity .22 .25*
transformational leadership .31** .30**
3 perceived expertise diversity x transformational leadership
.24*
R² .10 .29 .33
ΔR² .10 .19** .05*
ΔF 2.23 7.69 4.28
* p< .05. ** p< .01.
In order to examine whether the relationship between perceived expertise diversity and individual innovation would change when transformational leadership was high and low, a simple slope analysis was conducted (Aiken & West, 1991). The significant interaction effects were depicted in Figure 1. As predicted, when transformational leadership was low, individual innovation was not significantly related to perceived expertise diversity (b= .02, t= .10, n.s.), and when transformational leadership was high, individual innovation was significantly and positively related to perceived expertise diversity (b= .49, t= 2.86, p< .01). The results supported H2.
Figure 2
DISCUSSION
MAIN FINDINGS
In this study, I investigated whether transformational leadership can moderate the negative effects of perceived expertise diversity on individual innovation. Also, I expected that transformational leadership would be positively related to individual innovation. The results showed that transformational leadership was positively related to individual innovation as expected. It means if the leader of a team shows more transformational leadership, his or her follower within the team
will work more innovatively. Moreover, transformational leadership could buffer the relationship between perceived expertise diversity and individual innovation. When transformational leadership was high, perceived expertise diversity was positively related to individual innovation, but when transformational leadership was low, there was no significant relationship between perceived expertise diversity and individual innovation. These findings suggest that, high transformational leadership can help team members make use of the perceived expertise diversity of the team to be innovative during work. But low transformational leadership has no function to help team members use perceived expertise diversity to work innovatively. Furthermore, organizational tenure was negatively related to individual innovation. It indicates that the longer an employee has worked in the company, the less innovative he/she will be.
THEORETICAL IMPLICATIONS
My study contributes to the expertise diversity literature and individual innovation literature. First, compared to the objective differences in expertise, the subjective differences in expertise have more significant influences on employees’ attitudes as well as behaviors (Turner et al., 1987, Oosterhof, 2008), but most of previous scholars focus on the objective expertise diversity (e.g., Randel & Jaussi, 2003; Van der Vegt, et al., 2003). So my study focusing on perceived expertise diversity can add more insights in existed few articles on perceived expertise diversity. More importantly, when researchers focus on expertise diversity on individual level, or team level, or organizational level, they prefer to move the emphasis to a higher level, therefore ignoring the effects at individual level (Oosterhof, 2008). This study indicates that different individuals in a team have different perceptions of expertise diversity of other team members, and they will react differently to others based on their different perceptions. If they want to maintain good self-evaluation or get more resources to expand themselves, they will learn from others with different expertise, but if they consider others in a different group from themselves, they will refuse to learn from others and react negatively to them.
That also explains why sometimes members in an expertise diverse team are willing to learn from each other, thus leading to positive team outcomes, and sometimes they refuse to cooperate with other, thus leading to negative results (Oosterhof, 2008).
Then, my study links transformational leadership with individual level outcomes. There are large amounts of studies to be found on transformational leadership and its effects on team level and organizational level outcomes, such as team performance (Dionne et al., 2004), organizational commitment (Podsakoff et al., 1990), organizational trust (Top et al., 2013) and overall performance (Yammarino et al., 1993). But few studies focus on the effects of transformational leadership on individual outcomes. Teams and organizations are composed of many individuals, so the outcomes of
a team or an organization are resulted from every individual’s behaviors and actions. Therefore, if the team level outcomes generated by transformational leadership are rather ambiguous, it is wise to investigate the root reasons from the individual level outcomes. For example, the relationship between transformational leadership and team innovation is rather ambiguous according to previous empirical studies (Jaussi & Dionne, 2003; Keller, 1992, 2006; Sosik, Kahai, & Avolio, 1998; Waldman &
Atwater, 1994). So Eisenbeiss, van Knippenberg, & Boerner (2008) investigated that phenomenon from team members’ behaviors and found that team innovation depended on the extent of individuals’ concern for high-quality performance. Future research can also try to find more individual level factors that will affect the relationship between transformational leadership and team innovation.
Furthermore, my study can connect both diversity and transformational leadership literature together. Although there are rising interests in both literature, the link between them is rarely developed (Kearney & Gebert, 2009). Moreover, “how transformational leadership affects the balance between negative and positive effects spawned by team diversity” (Van Knippenberg &
Schippers, 2007, p.77) has not been explored yet. So my study can contribute to these gaps. It proves that high transformational leadership is a factor to ensure that the positive effects generated by perceived expertise diversity on individual innovation outweigh the negative effects. It also means that when transformational leadership is high, the positive effects on individual innovation from self- expansion theory (Aron et al., 2004) and self-evaluation maintenance theory (e.g., Tesser & Campbell, 1982) are more powerful than the negative effects from social identity theory (Tajfel & Turner, 1986), self-categorization theory (Turner et al., 1987) and similarity attraction paradigm (Byrne, 1971).
Through high transformational leadership, individuals are more willing to expand themselves and keep good self-evaluation than react negatively to those who differ from themselves. Moreover, when transformational leadership was low, the negative and positive effects generated by perceived expertise diversity on individual innovation are equal or similar. It means that two kinds of theories play same amounts of usefulness on individual innovation.
PRACTICAL IMPLICATIONS
A diverse workforce seems to be the future trend in organizations (Fullerton & Toossi, 2001). So how to manage and lead an expertise diverse team is the major task of every team leader. The results of this study give insights to the leader of an expertise diverse team about how to improve team member’s innovation. More specifically, transformational leaders can help individuals make use of perceived expertise diversity to be innovative. Because transformational leadership behaviors can be trained and improved (Barling, Weber & Kelloway, 1996), leaders of expertise diverse team are advised to follow the training programs to be transformational. For example, such programs can train
team leaders’ ability to articulate a clear vision for the whole team (Awamleh & Gardner, 1999;
Berson & Oreg, 2011), so that team members can perceive more positive effects of the change, and thus, become more committed to the leaders. Moreover, team leaders should learn to focus more on each member’s feelings and requirements, and try best to satisfy their demands. Team leaders can also follow training system to provide an appropriate model for the followers, so that the followers can know the central goals, attitudes and mission of the team clearly. In the training program, leaders could become more transformational than before by following the guidance of transformational leadership behaviors. In order to improve team member’s innovation, organizations can make use of such training program to cultivate the leader of an expertise diverse team to be more transformational. Moreover, in the recruitments, organizations can consider these transformational leadership behaviors as criteria to select a qualified transformational leader .
Moreover, organizational tenure was negatively related to individual innovation in this study. It indicates that the longer employees have worked in the company, the less innovative they will be. So, team leaders should bear in mind that point when they choose different members to finish different tasks. Team leaders can deliver tasks which require more innovation and flexibility to those who have worked in the company for a comparably shorter time. And they can give general and routine tasks which need less innovation to those who have worked in the company for a longer time. That would be good for team members to work more efficiently and effectively.
LIMITATIONS AND FUTURE RESEARCH
However, there are several limitations in my study. First of all, in factor analysis process, the item (my leader inspires others with his/her plans for the future), representing the dimension articulating a vision of transformational leadership has a relatively low loading (.58) under the factor. Although the loading is acceptable, it is not a perfect one compared with other items under the same factor. Low loading means that this item can’t represent this dimension (articulating a vision) perfectly, which will negatively influence the accuracy to test transformational leadership. Maybe the question is not easily understandable for the employees in the company, maybe articulating a vision is not usually used by the team leaders in this company, maybe the formulation of this question can generate more than one meanings for participants. All the abovementioned possibilities will lead to the low loading of this item. So I suggest that further research should use more items to represent this dimension (articulating a vision) instead of just one.
Then, there are three steps in individual innovation, which are idea generation, idea promotion and idea implementation (Janssen, 2000; 2001; Scott & Bruce, 1994). But in my study, I only focused on idea implementation because the other two steps do not match the organizational culture and
functionality of the involved departments. This is because the majority of departments involved are administrative/sales/marketing related, and only two departments (“New Business Development”
and “kleurenlaboratorium”) are related to idea generation and idea promotion. For the majority of samples, team leaders focus more on the visible application and outcomes of their team members’
innovative ideas, and team members prefer to realize their creative ideas to satisfy the leaders’
expectations. Therefore, in my study, individual innovation is more about idea implementation than idea generation and idea promotion. Also, in factor analysis, out of the 6 items representing idea generation and idea promotion, 5 items were deleted because of chaotic and improper results. Based on the data analysis results, organizational culture and functionality of departments, individual innovation in this study is idea implementation. However, the results about individual innovation in my study overlook idea generation and promotion steps, which is not good to generalize the findings.
So future research on individual innovation should take organizational culture and operational way into consideration when choosing samples, in order to contain all the three steps in individual innovation.
Most of previous studies just investigate transformational leadership and individual innovation in a macro way, because they always combine the six dimensions of transformational leadership as a single factor (cf. Bass, 1985; Bennis & Nanus, 1985; Bradford & Cohen, 1984), and combine all the 3 steps of individual innovation as one composite (cf. Janssen, 2000, 2001; Scott & Bruce, 1994) to carry out research. That gives us an inspiration that future researchers can investigate the relationship between transformational leadership and individual innovation in a micro way. As transformational leadership may have different influences on different steps of individual innovation, investigating individual innovation by steps can help organizations improve individual innovation more effectively and efficiently. For example, if transformational leadership is significantly and positively related to idea generation, but only slightly related to idea promotion and implementation, organizational leaders should make full use of transformational leadership to improve employees’
idea generation, and focus less on this kind of leadership to improve idea promotion and implementation. Instead, leaders should think of other more efficient ways to improve these two innovation steps.
Moreover, the sample is only collected from one company, which is a family-owned painting company. Family-owned organization is different from other types of organizations to some extent.
For example, family business may focus more on the sustainable development instead of on short- term benefits, while other commercial organizations focus more on benefits and money. Therefore, other organizations may focus more on employee’s innovation to work out creative plans to get profits in a short time, while family business don’t have such a strong willing to urge their employees
to be innovative. Therefore, people in family business may have a lower level individual innovation compared with those in other commercial organizations. Moreover, family-owned company is more willing to hire local people, so the cultural backgrounds of employees are likely to be similar, and people come from the same country understand each other more easily to some extent. Therefore, the level of perceived expertise diversity may be lower than that in other international companies. So further research needs to gather data from different kinds of company (e.g. trading companies, consulting companies, international companies and banks) to generalize findings.
Furthermore, a sample of 67 respondents was used to carry out investigation in this study. However, it is a limitation because the number is far below the proper level to generalize the results (Field, 2013). Moreover, the generalization is also limited by the fact that the study is cross-sectional instead of longitudinal. Because my sample was collected only once at a single point, which would lead to “systematic method error” (Rindfleisch, Malte, Ganesan, & Moorman, 2008). But longitudinal method can avoid this kind of bias because time separation between data collections can make respondents generate different responses, so that the earlier responses are less likely to influence the overall responses (Rindfleisch et al., 2008). Therefore, further research is suggested to carry out investigations with more respondents and a longitudinal method.
ACKNOWLEDGMENTS
I am very grateful to my supervisor Hanneke Grutterink, and my second supervisor Joyce Rupert for their professional and constructive feedback on earlier versions of this paper. I also want to thank Van Wijhe Verf for assisting me with data collection.
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