Research Proposal

“Analyzing the factors affecting Individual

Innovation: The case of Producer group members
in Pakistan”

Submitted by: Masood Nawaz Kalyar

Class: M.Phil/MSBA

Session: 2010-2011

National University of Modern Languages,

Aiwan-e-Iqbal, Lahore.
Contents

Introduction .................................................................................................................................................. 3
Problem Statement ....................................................................................................................................... 5
Literature Review .......................................................................................................................................... 6
Objectives of the study ................................................................................................................................. 9
Data Source ................................................................................................................................................. 10
Methodology............................................................................................................................................... 10
Hypothesis................................................................................................................................................... 10
References ................................................................................................... Error! Bookmark not defined.2
Questionnaire ........................................................................................................................................... 144
Introduction

The word innovation was derived from the Latin word innovationem and innovates which means
“to renew or change”. The pioneer of innovation management Joseph A. Schumpeter (1883 –
1950) an Austrian-American economist and political scientist stated that “innovation changes the
values onto which the system is based” (Schumpeter, 2003). In the business world, innovation is
defined as new products, services, or work processes that help a firm to gain a competitive
advantage (Schilling, 2008). Creative theorists (Amabile, 2000; Amabile, Conti, Coon, Lazenby, &
Herron, 1996) defined innovation as the successful implementation of creative ideas within an
organization. Innovation, in short, is the process of creating, developing and implementing new
ideas towards a product or service.

The significance of innovation for an organization and firm is to sustain their competitive
advantage in today’s hypercompetitive environment. Through the internet and effective
communication networks, managers have fresh, latest and up-to-date information on the
processes, procedures, methods and techniques that are important, relevant and useful to their
production or services, such as information on applications of new equipment, which they
can utilize to increase the efficiency in their operations (Oskarsson, 2003) to capture market
share and ensuring successful running. These new and improved communication networks make
up-to-date information’s not only open to potential customers, but also to competitors who can
easily use this information to offer similar or even better products (Oskarsson, 2003).
Because of the hypercompetitive environment, the lifetime of new equipment and technology has
become considerably shorter and the focus of competitive advantage has shifted towards
innovation and technical and technological development. Innovation is therefore increasingly
important, especially for companies that produce technology-driven products, with the risk
of technological obsolescence (Brown & Karagozoglu, 1993) and in environments characterized
by competitive intensity, technological and market dynamism (Kessler & Chakrabarti, 1996).

The processes, antecedents, and upshots of creativity and innovation in organizations have held
the interests of both organizational researchers and change management practitioners for several
decades now. Research into innovation has continued to shed light upon the factors that help and
hinder innovation at several levels of analysis in organizational settings (Anderson & Gasteiger,
2006). Organizations around the world are facing a common challenge that is the need to
improve their performance in order to capitalize on rapid change, and to establish or regain
competitive advantage (Basadur & Gelade, 2006) to ensure their survival, profitability and
successful running in dynamic competitive environment. Innovativeness of firms and
organizations depends on internal factors such as the firm’s innovative capability, size and
structure, learning orientation and strategic orientation and external factors such as network
of partners, external communication and the industrial environment (Oskarsson, 2003) in
which the company is located. An extensive literature and research is evident on thorough and
extensive research on firm and organization’s innovation while a little work is available
regarding individual innovation and this area needs further research efforts to prove it adequate
(Pratoom & Savatsomboon, 2010), most existing research into innovation has focused at the firm
level and few studies have directly tested the intermediate processes through which individual
and contextual factors affect individual innovation (Oldham & Cummings, 1996; Yuan, 2005). The
lack of research in this area confines understanding of exactly how and why individual
differences and contextual factors are affecting individual innovation (Pratoom & Savatsomboon,
2010).

Individual innovation refers to the creativity, exploitation and implementation of new and useful
products and procedures (Baumgartner; Pratoom & Savatsomboon, 2010) by individuals.
Innovation is a complex process and it arises from linkages between multiple sources (Schilling,
2008) rather from a single and individual source. Several scholars suggested that creativity
(Amabile, 2000; Heye, 2006; Schilling, 2008) and self-leadership (DiLiello & Houghton, 2006)
are important antecedents of individual innovation, and culture (Janssen, Van de Vliert, & West,
2004) and knowledge management (Aulawi, Sudirman, Suryadi, & Govindaraju, 2009;
Muhammed, Doll, & Deng, 2008) are group level antecedent. Yet, few studies have directly
tested the effects of perceptions and expectations on individual innovation and how these
antecedents mediate effects of more distal factors such as individual differences and organization
characteristics. (Scott & Bruce, 1994) study was the first attempt to systematically examine the
antecedents to individual innovative behaviors since West and Farr’s 1989 call for more
individual innovation research. In their study, the authors examined how contextual factors such
as leader-member exchange and individual difference variables such as different problem-
solving styles influence individual innovative behaviors through the perceptions of organization
climate for innovation (Yuan, 2005). The practical innovation among Pakistani firms and
innovators is therefore an important mechanism for developing, improving and sustaining the
competitive advantage for not only ensuring firm’s survival but also firm’s success. These are
individuals whose innovation and creativity provides foundation for high-performance (Carmeli,
Meitar, & Weisberg, 2006; Janssen, et al., 2004) and firm’s competitiveness (Schilling, 2008).

Problem Statement

This study will be an effort to analyze and explain the antecedent factors affecting individual
innovation among Pakistani producer group members. This study will focus on the relationship
among creativity, self-leadership, knowledge management and constructive group culture, and
will explain that how do these antecedents affect individual innovation in workplace.
Furthermore, the mediating role of creativity for self-leadership, knowledge management and
constructive culture will also be explained along with exploring and analyzing the moderating
effect of culture on creativity in the course of individual innovation.
Literature Review

(Kianto, 2011) examined the key facilitators of innovation in knowledge-intensive group-level

collaboration based on pragmatic evidence. Innovation and knowledge creation are processes,
which need rigorous cooperation of several people. However, the elements of successful
collaboration and cooperation in innovation activities are not well-known, and the understanding
of the inherently social processes by which new intangibles are created is still nascent. Author
critically analyzed the key facilitators of innovation in knowledge-intensive group-level
collaboration based on empirical evidence. The author concluded that social factors are highly
influential for knowledge worker teams' ability to make innovations. Teams whose internal
processes were characterized by trust, vision, aims for excellence, participative safety and
support for innovation were likely to attain high levels of innovation. Team diversity based on
highly visible traits was found to be negatively related with team innovation. Remarkably, also
external collaboration seemed to affect team innovation outcomes negatively, except for when it
was aimed at general scanning for ideas and information. Moreover, the differences between the
more and the less innovative teams arose mainly from differences in their internal interaction
processes, rather than patterns of collaboration with people outside the team.

(Aulawi, et al., 2009) researched on a view point that employees’ capability to innovate is a
significant factor for a company to survive in competition. Authors stated that several researchers
examined that the one of the effective efforts to develop employees’ capability to innovate in an
organization, is made through the development of knowledge sharing. Through the activity of
knowledge sharing knowledge can be spread, implemented and developed. Moreover,
Knowledge sharing can encourage individuals to think more critically and more creatively, so
they finally can produce new knowledge which is beneficial and useful for the organization.
Initiative development in of knowledge sharing in an organization needs strategy and facilities
support from the management board. Therefore, authors said, this research is intended to
investigate and examine the relationship among a) knowledge enablers, b) knowledge behavior
and c) individual innovation capability.

Through the analysis of those three concepts, it was expected that understanding can be formed
among practitioners or academics about the benefits gained from the development of knowledge
sharing activity, and knowledge enablers about what is assumed effective to support the
development of knowledge sharing activity in an organization. Authors used the theory of
planned behavior (TPB) to explain the relationship between knowledge enablers and knowledge
sharing behavior. Through a field survey of 125 employees in an Indonesian telecommunication
company, structural equation model (SEM) approach was used and it was found that knowledge
sharing behavior gives positive impact on individual innovation capability. Then, teamwork,
trust, senior management support and self-efficacy are found as knowledge enablers which are
very positive in forming employee’s knowledge sharing behavior.

(Muhammed, et al., 2008) critically analyzed the relationships among individual knowledge
management outcomes such as conceptual knowledge, contextual knowledge, operational
knowledge, innovation, and performance. In knowledge work, it is the individual worker’s
innovations and performance that make organizations more productive. Authors stated that
previous discussions have focused on defining knowledge management success at the
organizational or project level, but largely ignored the factors that define knowledge
management success for the individual knowledge worker. Their exploratory work proposes a
model of the relationships among individual knowledge management outcomes such as
conceptual knowledge, contextual knowledge, operational knowledge, innovation, and
performance. They tested the model using a sample of 252 knowledge workers. On the basis of
results it was concluded that conceptual knowledge enhances operational and contextual
knowledge. Moreover, contextual knowledge also improves operational knowledge. Contextual
knowledge is the key predictor of innovations that, along with operational knowledge, enhance
work performance. The results from the study provided a model for defining and measuring
knowledge management success, as outcomes at the individual level.

(Yuan, 2005) analyzed the individual innovation at workplace and shed light on the question of
why employees engage in innovative behaviors from a motivational perspective with a focus on
outcome expectations. He hypothesized and tested expected positive performance outcomes,
expected image risks, and expected image gains as proximal determinants of employee’s
innovative behavior at work based on both the efficiency-oriented and social-political
perspectives of innovation. Moreover, he developed and tested a model where distal contextual
and individual antecedents affect individual innovative behavior indirectly through these
performance and image outcome expectations. He took a contingency approach and tested the
moderating effect of perceived reward contingencies on the effects of performance and image
outcome expectations. Factor analysis was used to do statistical analysis.

Author concluded that expected image gains had no significant relationship with innovative
behavior but shared some irrelevant variance with expected positive performance outcomes that
was not related to innovative behavior. The effect of expected image risks on innovative
behavior was also found to be moderated by reward contingencies. It was found that the effect of
expected positive performance outcomes on innovative behavior was stronger when an employee
perceived a closer link between her job performance and his/her success and survival in the
organization. Author suggested that efficiency-oriented and social political processes are
operating simultaneously to affect employee innovation. It thus reveals the value of utilizing
multiple perspectives to examine individual innovation instead of relying on a single perspective.

(Oskarsson, 2003) critically examined the antecedent factors of innovation and innovation
process on the basis of literature available at that time. The author defined and emphasized on
the need and importance of innovation particularly in context t globalization. He explored the
antecedents participating in innovation process developed a conceptual model to explain impact
of antecedents on innovation process. He categorized literature on antecedents and innovation
into four categories (a) antecedents to innovations (b) consequences (outcomes) of innovations
(c) the process of innovations (d) diffusion of innovations.

The author critically analyzed innovation capability, individual innovation characteristics,

organizational learning, technological learning and external orientation in context with network
of actors, network of resources and that of activities that how do these parameters and
antecedents lead towards innovative ideas. Author concluded that innovation process is
knowledge oriented, and efficient processes to quickly introduce new products and adapt new
processes are necessary for a firm to sustain its competitive advantage. He also argued that
efficient procedure, systems and structure for knowledge integration are important antecedents to
innovativeness. Environmental inputs and administrative positions have strong impact on
innovative behavior and strong relationship with the external environment and social relations
affect the speed of knowledge integration especially when the firm undertakes formal
knowledge integration and the firm’s intellectual capital is strongly rooted in its social relations.
(Kleysen & Street, 2001) explained that the individual level innovation often assesses only one
dimension of innovative behavior. Therefore it does not sufficiently assess the richness of the
construct of individual innovation. Authors developed and tested a multi-dimensional measure of
individual innovative behavior. They identified descriptions of 289 innovation related behaviors
and coded these into a hypothesized factor structure comprising of the following five
dimensions: opportunity exploration, generativity, formative investigation, championing, and
application. They used structural equation modeling on a sample of 225 employees from nine
different organizations delivered a relatively poor fit between the hypothesized factor structure
and respondents’ job behaviors. However, a single factor measure based on items representing
all five factors resulted in an alpha reliability of 0.95 and supporting a multi-dimensional
conceptualization of innovative behavior in general. Authors also discussed the implications for
future research.

Objectives of the study

The objectives of the study are,

1) Explaining the factors affecting individual innovation

2) To investigate the impact of creativity on individual innovation
3) To trace out the effect of self-leadership on individual innovation
4) To examine how does knowledge management contributes towards individual innovation
5) To explore the relationship between culture and individual innovation
6) To explain the mediating role of creativity for self-leadership, culture and knowledge
management
7) To investigate moderating role of culture for creativity in course of individual innovation
Data Source

This is an empirical study analyzing and explaining the effect of antecedents on individual
innovation among producer group members in Pakistan. Therefore, this involves primary source
of data and it will be collected through a questionnaire from producer companies listed in KSE-
100 index. The questionnaire is derived from Karum Pratoom and Gomon Savatsomboon (2010)
and they have checked and assured the validity and reliability of the instrument.

Methodology

Analysis of variance technique will be used to detect interviewer bias. All constructs in this study
will be measured based on a 5-point Likert scale, that ranged from 1 (strongly disagree) to 5
(strongly agree). The innovation constructs will be measured based on a yes (1) or no (0)
response. The underlying dimensions for all constructs will be explored by using the exploratory
factor analysis (EFA).

Hypothesis

Hypothesis 1: Creativity positively affects organization’s group members’ innovation.

Hypothesis 2a: Self-leadership positively affects group members’ innovation.

Hypothesis 2b: Self-leadership positively affects group members’ innovation through creativity.

Hypothesis 3a: Groups’ knowledge management positively affects group members’ innovation.

Hypothesis 3b: Groups’ knowledge management positively affects group members’ innovation
through creativity.

Hypothesis 4a: Groups’ constructive culture positively affects group members’ innovation
through creativity.
Hypothesis 4b: Groups’ constructive culture positively affects group members’ innovation
through self-leadership.

Hypothesis 4c: Groups’ constructive culture moderates the relationships between group
members’ creativity and innovation.

Hypothesis 4d: Groups’ constructive culture moderates the relationships between individual
self-leadership and innovation.
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