Strengthening Managerial Innovation Behavior in the SMEs

The Role of CEO Transformational Leadership, Cross-Functional Integration and Innovation Culture

Authors

  • Bruce Gashema
  • Yongqiang Gao

DOI:

https://doi.org/10.20525/ijrbs.v7i3.883

Keywords:

Transformational Leadership, Managerial Innovation, Behavior, Cross-Functional integration, Organizational Innovation Culture

Abstract

Managerial innovation as an internal change agent plays a central role in coping with the speed of today’s fast-paced customer demand and highly competitive market, yet previous studies paid less attention to the potential measures of strengthening managerial innovation behavior within organizations. Drawing from transformational leadership theory, the current study shed new light on this issue by examining the role of CEO transformational leadership (TFL), innovation culture (IC) and cross-functional integration (CFI) in advancing managerial innovation behavior in SMEs. A cross-sectional study with a sample of 434 respondents from 24 SMEs operating in Rwanda was conducted. To genuinely analyze the relationship between the variables hypothesized in this study, we used structural equation modeling (SEM) and bootstrapping technique using Amos 23 and SPSS 24. The overall findings revealed that the relationship proposed in the model were significantly supported. However, our new mechanism implying innovation culture and cross-functional integration in the relationship between CEO transformational leadership and managerial innovation behavior, provide a substantial contribution to management literature.

Downloads

Download data is not yet available.

References

Afsar, B., Badir, Y., & Khan, M. M. (2015). Person-job fit, person-organization fit and innovative work behavior: The mediating role of innovation trust. Journal of High Technology Management Research, 26(2), 105–116. https://doi.org/10.1016/j.hitech.2015.09.001

Afsar, B., F. Badir, Y., & Bin Saeed, B. (2014). Transformational leadership and innovative work behavior. Industrial Management & Data Systems, 114(8), 1270–1300. https://doi.org/10.1108/IMDS-05-2014-0152

Aksoy, H. (2017). How do innovation culture, marketing innovation and product innovation affect the market performance of small and medium-sized enterprises (SMEs)? Technology in Society, 51, 133–141. https://doi.org/10.1016/j.techsoc.2017.08.005

Ali Taha, V., Sirkova, M., & Ferencova, M. (2016). the Impact of Organizational Culture on Creativity and Innovation. Polish Journal of Management Studies, 14(1), 7–17. https://doi.org/10.17512/pjms.2016.14.1.01

Aragón-Correa, J. A., García-Morales, V. J., & Cordón-Pozo, E. (2007). Leadership and organizational learning’s role on innovation and performance: Lessons from Spain. Industrial Marketing Management, 36(3), 349–359. https://doi.org/10.1016/j.indmarman.2005.09.006

Bass, B.M.(1990).From Transactional to Iransformational Leadership :Learning to Share the Vision.Organizational Dynamics,18(3),19–32.https://doi.org/10.1016/0090-2616(90)90061-S

Bass, B. M. (2000). The Future of Leadership in Learning Organizations. Journal of Leadership Studies, 7(3), 18–40. https://doi.org/10.1177/107179190000700302

Bass, B. M., & Avolio, B. J. (1990). Developing Transformational Leadership: 1992 and Beyond. Journal of European Industrial Training, 14(5). https://doi.org/10.1108/03090599010135122

Bass, B. M., Avolio, B. J., Jung, D. I., & Berson, Y. (2003). Predicting unit performance by assessing transformational and transactional leadership. Journal of Applied Psychology, 88(2), 207–218. https://doi.org/10.1037/0021-9010.88.2.207

Bass, B. M., & Steidlmeier, P. (1999). Ethics, character, and authentic transformational leadership behavior. The Leadership Quarterly, 10(2), 181–217.https://doi.org/10.1016/S1048-9843(99)00016-8

Bendig, D., Enke, S., Thieme, N., & Brettel, M. (2018). Performance implications of cross-functional coopetition in new product development : the mediating role of organizational learning.Industrial Marketing Management,73(February),137–153. https://doi.org/10.1016/j.indmarman.2018.02.007

Birkinshaw, J., Hamel, G., & Mol, M. J. (2008). Management innovation. Academy of Management Review, 33(4), 825–845.

Bligh, M. C., Kohles, J. C., & Yan, Q. (2018). Leading and Learning to Change: The Role of Leadership Style and Mindset in Error Learning and Organizational Change. Journal of Change Management, 18(2), 116–141. https://doi.org/10.1080/14697017.2018.1446693

Carless, S. A., Wearing, A. J., & Mann, L. (2000). A short measure of transformational leadership. Journal of Business and Psychology, 14(3). https://doi.org/10.1023/A:1022991115523

Chang, Y. Y. (2016). Multilevel transformational leadership and management innovation: Intermediate linkage evidence. Leadership and Organization Development Journal, 37(2), 265–288. https://doi.org/10.1108/LODJ-06-2014-0111

Chen, A. S. Y., & Hou, Y. H. (2016). The effects of ethical leadership, voice behavior and climates for innovation on creativity: A moderated mediation examination. Leadership Quarterly, 27(1), 1–13. https://doi.org/10.1016/j.leaqua.2015.10.007

Choi, S. B., Kim, K., Ullah, S. M. E., & Kang, S. (2016). How transformational leadership facilitates innovative behavior of Korean workers. Personnel Review, 45(3), 459–479. https://doi.org/10.1108/PR-03-2014-0058

Cronbach, L. J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16(3), 297–334. https://doi.org/10.1007/BF02310555

Curado, C. (2018). Human resource management contribution to innovation in small and medium-sized enterprises: A mixed methods approach. Creativity and Innovation Management, 27(1), 79–90. https://doi.org/10.1111/caim.12251

Damanpour, F. (2014). Footnotes to research on management innovation. Organization Studies, 35(9), 1265–1285. https://doi.org/10.1177/0170840614539312

Damanpour, F., & Aravind, D. (2012). Managerial Innovation:Conceptions, Processes, and Antecedents. Management and Organization Review,8(2),423–454. https://doi.org/10.1111/j.1740-8784.2011.00233.x

De Jong, J. P. J., & Den Hartog, D. N. (2007). How leaders influence employees’ innovative behaviour. European Journal of Innovation Management,10(1),41–64. https://doi.org/10.1108/14601060710720546

Dobni, C. B. (2008). Measuring innovation culture in organizations: The development of a generalized innovation culture construct using exploratory factor analysis. European Journal of Innovation Management, 11(4), 539–559. https://doi.org/10.1108/14601060810911156

Fairchild, A. J., & MacKinnon, D. P. (2009). A general model for testing mediation and moderation effects. Prevention Science, 10(2), 87–99. https://doi.org/10.1007/s11121-008-0109-6

Faruk Şahin, Sait Gürbüz, H. Ş. (2017). Leaders ’ managerial assumptions and transformational leadership : the moderating role of gender. Leadership & Organization Development Journal, 38(1), 105–125. https://doi.org/10.1108/LODJ-11-2015-0239

Fernández-Esquinas, M., van Oostrom, M., & Pinto, H. (2017). Key issues on innovation, culture and institutions: implications for SMEs and micro firms. European Planning Studies, 25(11), 1897–1907. https://doi.org/10.1080/09654313.2017.1364770

Fornell, C., & Larcker, D. F. (1981). Evaluating Structural Equation Models with Unobservable Variables and Measurement Error. Journal of Marketing Research, 18(1), 39–50. https://doi.org/10.2307/3151312

Francis J.Yammarino and Bernard M. Bass. (1990). transformational leadership and multiple levels of analysis. SAGE Social Science Collections, 43(10), 975–995.

Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate Data Analysis. Vectors. https://doi.org/10.1016/j.ijpharm.2011.02.019

Hamel, G. (2006). The Why, What, and How of Management Innovation. Havard Business Review, 84(2), 72. https://doi.org/10.1080/09537320802557384

Harbi, S. El, Anderson, A. R., & Amamou, M. (2014). Innovation culture in small Tunisian ICT firms. Journal of Small Business and Enterprise Development, 21(1), 132–151. https://doi.org/10.1108/JSBED-06-2013-0086

Hayes, A. F. (2009). Beyond Baron and Kenny: Statistical mediation analysis in the new millennium.CommunicationMonographs,76(4),408–420. https://doi.org/10.1080/03637750903310360

Heyden, M. L. M., Sidhu, J. S., & Volberda, H. W. (2018). The Conjoint Influence of Top and Middle Management Characteristics on Management Innovation. Journal of Management, 44(4), 1505–1529. https://doi.org/10.1177/0149206315614373

Hirunyawipada, T., Beyerlein, M., & Blankson, C. (2010). Industrial Marketing Management Cross-functional integration as a knowledge transformation mechanism : Implications for new product development. Industrial Marketing Management, 39(4), 650–660. https://doi.org/10.1016/j.indmarman.2009.06.003

Hollen, R. M. A., Van Den Bosch, F. A. J., & Volberda, H. W. (2013). The Role of Management Innovation in Enabling Technological Process Innovation: An inter-organizational perspective. European Management Review, 10(1), 35–50. https://doi.org/10.1111/emre.12003

Hu, L. T., & Bentler, P. M. (1998). Fit indices in covariance structure modeling: Sensitivity to underparameterized model misspecification. Psychological Methods, 3(4), 424–453. https://doi.org/10.1037//1082-989x.3.4.424

Jaiswal, N. K., & Dhar, R. L. (2015). Transformational leadership, innovation climate, creative self-efficacy and employee creativity: A multilevel study. International Journal of Hospitality Management, 51, 30–41. https://doi.org/10.1016/j.ijhm.2015.07.002

James C. Anderson & David W. Gerbing. (1988). Structural equation modeling in practice: a review and recommended two-step approach. Psychological Bulletin, 103(3), 411–423.

Jung, D. I., Bass, B. M., & Sosik, J. J. (1995). Bridging Leadership and Culture: A Theoretical Consideration of Transformational Leadership and Collectivistic Cultures. Journal of Leadership Studies, 2(4), 3–18. https://doi.org/10.1177/107179199500200402

Jung, D. I., Chow, C., & Wu, A. (2003). The role of transformational leadership in enhancing organizational innovation: Hypotheses and some preliminary findings. Leadership Quarterly, 14(4–5), 525–544. https://doi.org/10.1016/S1048-9843(03)00050-X

Kang, J. H., Solomon, G. T., & Choi, D. Y. (2015). CEOs’ Leadership styles and managers’ Innovative behaviour: Investigation of intervening effects in an entrepreneurial context. Journal of Management Studies, 52(4), 531–554. https://doi.org/10.1111/joms.12125

Khalili, A. (2016). Linking transformational leadership, creativity, innovation, and innovation-supportive climate. Management Decision, 54(9), 2277–2293. https://doi.org/10.1108/MD-03-2016-0196

Kock, N., & Lynn, G. S. (2012). Lateral Collinearity and Misleading Results in Variance-Based SEM : An Illustration and Recommendations. Journal of the Association for Information Systems, 13(7), 546–580.

Linke, A., & Zerfass, A. (2011). Internal communication and innovation culture: developing a change framework. Journal of Communication Management, 15(4), 332–348. https://doi.org/10.1108/13632541111183361

Makri, M., & Scandura, T. A. (2010). Exploring the effects of creative CEO leadership on innovation in high-technology firms. Leadership Quarterly, 21(1), 75–88. https://doi.org/10.1016/j.leaqua.2009.10.006

Mol, M. J., & Birkinshaw, J. (2014). The role of external involvement in the creation of management innovations.OrganizationStudies,35(9),1287–1312. https://doi.org/10.1177/0170840614539313

Neves, P., & Eisenberger, R. (2014). Perceived organizational support and risk taking. Journal of Managerial Psychology, 29(2), 187–205. https://doi.org/10.1108/JMP-07-2011-0021

Nieves, J. (2016). Outcomes of Management Innovation: An Empirical Analysis in the Services Industry. European Management Review, 13(2), 125–136. https://doi.org/10.1111/emre.12071

Olmos-Peñuela, J., García-Granero, A., Castro-Martínez, E., & D’Este, P. (2017). Strengthening SMEs’ innovation culture through collaborations with public research organizations. Do all firms benefit equally European Planning Studies, 25(11), 2001–2020. https://doi.org/10.1080/09654313.2017.1279592

Organ, D. W., & Kovovsky, M. (1989). Cognitive versus affecive determinants of organizational citizenship behavior. Journal of Applied Psychology, 74(1), 157–164.

Padilha, C. K., & Gomes, G. (2016). Innovation culture and performance in innovation of products and processes: a study in companies of textile industry. RAI Revista de Administração e Inovação, 13(4), 285–294. https://doi.org/10.1016/j.rai.2016.09.004

Panuwatwanich, K., Stewart, R. A., & Mohamed, S. (2008). The role of climate for innovation in enhancing business performance: The case of design firms. Engineering, Construction and Architectural Management, 15(5), 407–422. https://doi.org/10.1108/09699980810902712

Park, S., & Jo, S. J. (2018). The impact of proactivity, leader-member exchange, and climate for innovation on innovative behavior in the Korean government sector. Leadership and Organization Development Journal, 39(1), 130–149. https://doi.org/10.1108/LODJ-09-2016-0216

Perez Jolles, M., McBeath, B., Carnochan, S., & Austin, M. J. (2016). Factors Associated With Managerial Innovation in Public Human Service Organizations. Human Service Organizations:Management,Leadership&Governance,40(4),421–434. https://doi.org/10.1080/23303131.2016.1184208

Peterson, S. J., Walumbwa, F. O., Byron, K., & Myrowitz, J. (2009). CEO positive psychological traits, transformational leadership, and firm performance in high-technology start-up and establishedfirms.JournalofManagement,35(2),348–368. https://doi.org/10.1177/0149206307312512

Shah, R., & Goldstein, S. M. (2006). Use of structural equation modeling in operations management research: Looking back and forward. Journal of Operations Management, 24(2), 148–169. https://doi.org/10.1016/j.jom.2005.05.001

Shanker, R., Bhanugopan, R., van der Heijden, B. I. J. M., & Farrell, M. (2017). Organizational climate for innovation and organizational performance: The mediating effect of innovative workbehavior.JournalofVocationalBehavior,100,67–77. https://doi.org/10.1016/j.jvb.2017.02.004

Strese, S., Meuer, M. W., Flatten, T. C., & Brettel, M. (2016). Organizational antecedents of cross-functional coopetition: The impact of leadership and organizational structure on cross-functional coopetition. Industrial Marketing Management, 53, 42–55. https://doi.org/10.1016/j.indmarman.2015.11.006

Su, S., & Baird, K. (2017). The role of leaders in generating management innovation†. International JournalofHumanResourceManagement,5192,1–22. https://doi.org/10.1080/09585192.2017.1282533

Terziovski, M. (2010). Innovatıon practıce and ıts performance ımplıcatıons ın small and medıum enterprıses (smes) ın themanufacturıng sector: a resource-based vıew. Strategic Management Journal, 31(8), 892–902. https://doi.org/10.1002/smj

Tharnpas Sattayaraksa, Sakun Boon-itt. (2016). CEO transformational leadership and the new product development process The mediating roles of organizational. Leadership & Organization Development Journal, 37(6), 730–749. https://doi.org/10.1108/LODJ-10-2014-0197

Troy, L. C., Hirunyawipada, T., & Paswan, A. K. (2008). New Product Success : An Empirical. Journal of Marketing, 72(November), 132–146.

Vaccaro, I. G., Jansen, J. J. P., van den Bosch, F. A. J., & Volberda, H. W. (2012). Management innovation and leadership: The moderating role of organizational size. Journal of Management Studies, 49(1), 28–51. https://doi.org/10.1111/j.1467-6486.2010.00976.x

Volberda, H. W., Van Den Bosch, F. A. J., & Heij, C. V. (2013). Management innovation: Management as fertile ground for innovation. European Management Review, 10(1), 1–15. https://doi.org/10.1111/emre.12007

Volberda, H. W., Van Den Bosch, F. A. J., & Mihalache, O. R. (2014a). Advancing management innovation: Synthesizing processes, levels of analysis, and change agents. Organization Studies, 35(9), 1245–1264. https://doi.org/10.1177/0170840614546155

Volberda, H. W., Van Den Bosch, F. A. J., & Mihalache, O. R. (2014b). Advancing management innovation: Synthesizing processes, levels of analysis, and change agents. Organization Studies, 35(9), 1245–1264. https://doi.org/10.1177/0170840614546155

Waldman, D. A., Siegel, D. S., & Javidan, M. (2006).Components of CEO Transformational Leadership and Corporate Social Responsibility Components of CEO Transformational Leadership. Journal of Management Studieshttps://doi.org/10.1111/j.1467-6486.2006.00642.x

Walumbwa, F. O., Avolio, B. J., Gardner, W. L., Wernsing, T. S., & Peterson, S. J. (2008). Authentic Leadership: Development and Validation of a Theory-Based Measure†. Journal of Management, 34(1), 89–126. https://doi.org/10.1177/0149206307308913

Walumbwa, F. O., Lawler, J. J., Avolio, B. J., Peng Wang, & Kan Shi. (2005). Transformational Leadership and Work-Related Attitudes: The Moderating Effects of Collective and Self-Efficacy Across Cultures. Journal of Leadership & Organizational Studies, 11(3), 2–16. https://doi.org/10.1177/107179190501100301

Yasin Ghadi, M., Fernando, M., & Caputi, P. (2012). Transformational leadership and work engagement. Leadership & Organization Development Journal,34(6),532–550. https://doi.org/10.1108/LODJ-10-2011-0110

Zhongfeng, Chen, J., & Wang, D. (2018). Technology Analysis & Strategic Management Organisational structure and managerial innovation : the mediating effect of cross- functional integration. Technology Analysis & Strategic Management,1–13. https://doi.org/10.1080/09537325.2018.1495324

Zuraik, A., & Kelly, L. (2018). The role of CEO transformational leadership and innovation climate in exploration and exploitation. European Journal of Innovation Management, 40(2), 412–432. https://doi.org/10.1108/EJIM-10-2017-0142

Downloads

Published

2018-11-20

How to Cite

Gashema, B., & Gao, Y. (2018). Strengthening Managerial Innovation Behavior in the SMEs: The Role of CEO Transformational Leadership, Cross-Functional Integration and Innovation Culture. International Journal of Research in Business and Social Science (2147- 4478), 7(3), 36–56. https://doi.org/10.20525/ijrbs.v7i3.883

Issue

Section

Articles