THE IMPACT AND INFLUENCE OF INNOVATION MANAGEMENT ON ORGANIZATIONAL CULTURE

CHAPTER ONE

INTRODUCTION

1.1BACKGROUND OF THE STUDY

Management experts and theoreticians alike are actually very involved in the ingenuity of contemporary companies. The effectiveness of an organization, especially a knowledge-based organization and its longevity, is recognized as depending on imagination, ingenuity and inventiveness (Martins, Terblanche, 2013). During the past thirty years, researchers have paid much attention to innovation (Gatignon et al., 2012). In a turbulent economic environment, innovation is considered as a very important strategic driver to gain new opportunities, protect knowledge assets, and achieve competitive advantage (Hurmelinna et al., 2018; Laith Ali and Shahizan Hassan, 2013). Innovative companies are more flexible in dealing with the phenomenon of change as well as can faster react to changes and create opportunities and gain competitive advantage compared to other companies, and that’s why innovation is considered a critical success factor in organizations (Darroch, 2015). The importance of innovations has prompted researchers to identify variables accelerating innovation (Becheikh et al., 2016). Today, companies highly compete in the knowledge. The knowledge-based theory of the firm suggests that knowledge is strategically the most important and crucial source of competitive advantage (Grant, 2016; Drucker, 2010). Some researchers believe that knowledge management activities are the most important drivers of innovation (Darroch et al., 2012; Liao et al., 2012). The knowledge-based view considers knowledge as a strategic resource in an organization with resource-based view (Grant, 2016; Gold et al., 2011; Laith Ali and Shahizan Hassan, 2013). In the meantime, knowledge creation is one of the important processes of knowledge management (Nonaka and Tkeuchi, 2015). When people are knowledge creator and create new knowledge, they express their creativity and make innovation happen. It is often difficult to separate organisational culture and organisational structure as both have developed in parallel over the lifetime of the organisation. While the literature is in agreement on the nature of organisational culture for managing innovation it is more difficult to discuss the organisational structure conducive to effective management of innovation. Mintzberg (1979) describes the ‘innovative organisation’ in his seminal work but this is a simplistic view of organisational structure for innovation management. Burns and Stalker (1961) on the other hand provide a contingent approach that highlights the complexities of organisational context on the management of innovation, it is this approach that we adopt when considering the relationships within our model.

Innovation is seen as the root of long-term success of an organization and a factor leading to its increased efficiency). Therefore, because of its potentially important effect on corporate efficiency, creativity has been the main priority of many organizations (Lee, 2014). In the long term, though, promoting creativity involves a certain organizational structure that is permanently integrated into the management systems and that pervades the whole enterprise. Growing competitiveness, internationalisation and the continuously evolving market climate make creativity a necessity not only for any organization’s development and prosperity, but also for its longevity in particular. Innovation is one of the undeniable problems that each organization can work on to maximize their production and efficiency in order to take advantage of these possibilities and resolve challenges. Innovation is considered one of the vital components of sustainability and development for each business, including product, process, promotion, and operational innovation within a company.

As a result of increased competition and rapid change taking place worldwide, creativity is especially critical in organizations today (Francis & Bessant, 2015). Studies suggest that creativity is driven by influences that are both external and internal to organisations (Schlegelmilch et al., 2013). Organizations that have a viable and clear potential to evolve are ones that have a greater view of the general market and the motivating forces of the economy and are able to more successfully focus their creative activities. This includes technology review, the development of client requirements, and understanding of the overall business climate, establishing basic goals of the organization, and understanding existing organizational culture. Organizational culture has been proposed to be a significant aspect that influences creativity. With regard to the factors that may affect innovation, a number of detailed reviews have been written. Organizational culture tends to impact the degree of creativity in an organisation (Tuan & Venkatesh, 2010). There is a need for a closer insight at the essence of corporate culture and for an inquiry into its interaction with organizational innovation, considering the value of innovation.

Managers play an important part in developing and promoting creative cultures, according to Keegan and Turner (2012). Innovative ideas management is a significant move for effective organizational creativity [Wong and Sang Chin (2017]. It is a good indicator for the realization of innovative ideas and organizational innovation management [Lee and Chang, 2016] as innovation starts with top management who agree that the path to survival is organizational innovation. Top management with an effective leadership style also creates an environment for innovation within the company. It should be capable of empowering and engaging the entire workforce and promoting staff engagement, growth and learning [Borgelt and Falk, 2017]. Christensen (2011) describes creativity management as an overarching responsibility of today’s executives. For example, product invention entails the production of innovative products and services. Managing such creativity will help businesses satisfy evolving consumer needs, or even accelerate them. Process invention also requires the development or enhancement of manufacturing, service or administrative processes approaches.

Efficient improvement in systems can increase the productivity and responsiveness of organizations [Damanpour & Gopalakrishnan, 2011],[Khazanchi et al 2017]. As literature has demonstrated, organizational culture plays an important role in developing a creative atmosphere within organisations [Khazanchi et al 2017] with respect to the variables impacting organizational innovation. According to Jassawalla and Sashittal (2012),’ an innovation-supporting culture is characterized as the social and cognitive atmosphere of an organization, the common perception of reality, and the mutual belief and value systems expressed in a clear behavioural pattern between participants’ (p 43). Furthermore, culture can offer an overarching structure of reference, help connect employee actions with corporate innovation goals and satisfy paradoxical expectations for control and stability. Organizational culture is generally characterized as a set of principles, convictions and expectations expressed by its participants and embodied in organizational processes and priorities. [Khazanchi et al 2017]. McGourty and his colleagues (2015) showed that through strategic guidance, workforce selection, incentives and acknowledgement, employee deployment, promotion of idea creation, and multifunctional teaming to foster creative behavior, an organizational culture can be changed through unique management strategies. Idea development and creativity in the corporate environment are two interrelated influences.

Innovation starts with ideas and therefore is regarded as an important variable of the innovation capacity of the organizations. The way individuals and organizations collect, disseminate, exchange, and use knowledge influences idea generation. Additionally, management of the flow of technological information leads to generating ideas effectively as an important part of an organization’s innovation capacity [Cohen & Levinthal, 2012], [Koc & Ceylan, 2017]. According to Peters (1982) and Pinchott (2014) middle managers play an important role in informally encouraging employees to innovate and take risks. These middle managers provide political and organizational support for “skunk work” activities that result in innovative ventures (Hornsby et al, 2011). Kanter (2014) and Quinn (2014) also noted the importance of middle managers in promoting autonomous or informal corporate entrepreneurial activities. Middle managers can do this by providing rewards (mostly intrinsic) that allow employees to experiment with, and explore the feasibility of, innovative ideas (Hornsby et al, 2011). Obviously, many organizational and environmental factors may affect on organizational innovation, but this research has mainly focused on the one important factor including organizational culture. Reviewed in the literature, management and culture affect on the other organizational aspects, therefore it is vital to know how this factor affects organizational innovation as well as how managers and policy makers should prepare necessary conditions, facilities, and innovative environments for changing organizational culture in organizations.

1.2 STATEMENT OF THE PROBLEM

Most organizations in Nigeria have had little or no competition for several decades currently is facing very stiff competition. This can be seen by low customer turnout in their places of business or organization. There is competition everywhere and there is urgent need to adopt new ways of doing business. Although, some organizations have come under pressure from both internal and external forces of competition, there has been little effort to respond to the increased volatile business environment. Organizations has a culture that may be preventing their status quo from changing yet precisely change of routine is required if the organization is to innovate and adapt to a dynamic environment. If there is no change in adopting innovation some organizations is likely to close shop as customers look elsewhere for better and improved service.

Innovation is often hampered by problems that can be explained by exploiting the concepts of culture. Culture is often considered a crucial basis for innovation in many respects (Kaasa & Vadi, 2010). Culture is even mentioned as the first problem in the presentation of the “10 big” innovation killers. It can contribute or hinder the process of implementing new ideas (Wycoff, 2013). The Global Competitiveness Report (2015) states that if organizations are to survive and thrive, new product development (NPD) and process improvements are of high importance. Companies must compete by producing new and different goods and services using sophisticated production methods or through innovation. The report classifies innovation as one of the key pillars for companies to be competitive. It argues that firms must design and develop cutting-edge products and processes to gain and maintain a competitive edge and move towards even higher value-added activities. Culture can promote or hinder innovation which further influences the success chances of an organization. In their study on the impact of organizational culture on innovation in small and medium enterprises, Çakar and Ertürk (2010) agree that most research has focused on innovativeness as an independent variable. Organizations must be competitive, not just nationally but also in the international market. This study therefore comes in to shed light on the direction that business entities require to adopt in order to survive in a volatile business environment by investigating the relationship between innovative management and its influence on organizational culture.

1. AIMS AND OBJECTIVES OF THE STUDY

The major aim of the study is to examine the impact and influence of innovation management and organizational culture.  Other specific objectives of the study include;

1. To examine the influence of product innovation on organizational culture.
2. To examine the influence of process innovation on organizational culture
3. To examine the influence of organizational innovation on organizational culture
4. To examine the factors of innovation management that influenced organizational culture.
5. To examine the relationship between innovation management and organizational culture.

1.4RESEARCH QUESTIONS

1. How is the influence of product innovation on organizational culture?
2. How is the influence of process innovation on organizational culture?
3. How is the influence of organizational innovation on organizational culture?
4. What are the factors of innovation management that influenced organizational culture?
5. What is the relationship between innovation management and organizational culture?
   1. RESEARCH HYPOTHESES

Hypothesis 1     

1. : There is no significant influence of product innovation on organizational culture.
2. : There is a significant influence of product innovation on organizational culture.

Hypothesis 2     

1. : There is no significant influence of process innovation on organizational culture.
2. : There is a significant influence of process innovation on organizational culture.

Hypothesis 3     

1. : There is no significant influence of organizational innovation on organizational culture.
2. : There is a significant influence of organizational innovation on organizational culture

Hypothesis 4

H0: There is no significant relationship between innovation management and organizational culture.

H1: There is a significant relationship between innovation management and organizational culture.

1. SIGNIFICANCE OF THE STUDY

The study sought to determine the influence of innovation management on organizational culture. The results from the study could benefit innovation management practitioners by providing specific constructs that can be applied towards improving the current approaches to innovation management. To the academicians, the study will form the basis for research into other areas of organizational culture, learning and creativity. Innovation management is indispensable for business results, and thus the research will be able to create strategic dialogue on issues of innovation performance that reflect the realities of organizational culture.

1. SCOPE AND LIMITATION OF THE STUDY

The study is restricted to the impact and influence of innovation management and organizational culture.

1. LIMITATION OF THE STUDY

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1. DEFINITION OF TERMS

Innovation Management: Innovation management is a combination of the management of innovation processes, and change management. It refers to product, business process, marketing and organizational innovation.

Organizational Culture: Is defined as the underlying beliefs, assumptions, values and ways of interacting that contribute to the unique social and psychological environment of an organization. Organizational culture includes an organization’s expectations, experiences, philosophy, as well as the values that guide member behaviour, and is expressed in member self-image, inner workings, interactions with the outside world, and future expectations. Culture is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are considered valid.

Learning: Learning is the process of acquiring new, or modifying existing, knowledge, behaviours, skills, values, or preferences. The ability to learn is possessed by humans, animals, and some machines.