Research Article: 2021 Vol: 20 Issue: 2S
Sania Khan, Prince Sattam Bin Abdulaziz University
Organizations with proper Human Resource (HR) practices play an exemplary role in developing their employees’ innovation. Though there is extensive literature on managing organizational innovation, even in today’s scenario some organizations barricade employees’ growth and innovation at the workplace. This study aimed to holistically explore the organizational factors affecting employee innovation using Principal Component Analysis (PCA) for factorizing sub-items and understand the relationship between various organizational factors and employee innovation using correlation analysis. The study executed a survey questionnaire and collected useful data from two hundred and fifty (250) respondents of various Saudi SME companies. The study developed sub-items and evolved into nine major organizational factors influencing employee innovation namely corporate structure, corporate culture and environment, organization strategy, innovation, employee, technology, resources, knowledge management, and management support. The hypotheses developed were tested with the collected data. The study found all the factors except corporate strategy and corporate culture and environment demonstrated a significant positive relation with employee innovation. The study recommended that any firm must focus on these factors to encourage employee innovation leading to overall organizational success. It also provides broad implications to HR managers, firm policymakers and top management to reassess and formulate the best organizational strategies to promote a culture of innovation in the organization.
Organizational Factors, Employee Creativity, SME’s, Employee Innovation, Correlation, Principal Component Analysis.
Extant literature in HR management predominantly emphasized on personnel innovation, manpower, operational capabilities and tactical aspects and projected socio-culture, work-life balance concepts as vital factors for a successful firms’ performance. Contrastingly, 360-degree dimensional view of organizational factors pertaining to employee creativity were rare which is actually an essential consideration in the developing arena of HR. In fact, creativity is a broad aspect. However, in this study the author aligns the concept referring to employee creativity. Retrospective literature states the words creativity and innovation are used interchangeably. To be more specific creativity involves in the idea generation and innovation as the administration of such notions in improvement of implementation process. Therefore, creativity is precondition for innovation. In this study, the authors intended (Woodman et al., 1993) meaning of creativity as the generation of an original knowledge specific to the field it denotes. In other study,
(Mumford et al., 2008) coined innovation as a sequence of processes beginning with identification of problem, generating novel ideas, assessment, and implementing them.
Many authors addressed that organization must improve in innovative initiatives to withstand in industry and be competitive (Roberts, 1998; Porter, 1990; Lengnick-Hall, 1992). Despite the existence of sufficient literature on organization dimension like Marisa et al., 2008; Anthony, 2000) contrastingly there is also a lack of explanation on statistical perspectives of identified factors. While some researchers overlooked to address organizational factors from employees’ viewpoint; others did not attempt to look it holistically. Hence, this paved the way to research gap from an organizational standpoint and skipped to contemplate the critical issues. Therefore, this research proposed to identify relevant organizational elements and analyze statistically to consolidate the organizational dimensionalities into a reduced number to focus easily.
In spite of being considerate of the organization role that drive the creativity process, pragmatic studies on influential factors on employee creativity were rare among Saudi Arabia SMEs and few other studies remained scattered. While interrelating organizational factors, authors also recommend to consider to view holistically various contingent variables. Therefore, this study proposed to tailor the gap by investigating the possible organizational components by the application of PCA method. The study is structured into six sections. Firstly, it brings the background of the study. Secondly, it provides a retrospective literature review. The next section conducts the data analysis followed by conclusion and managerial implications, scope of further research studies, and limitations faced in this study.
Andriopoulos, dentified five factors namely organizational climate, organizational culture, skills and resources, leadership style, and corporate structure as encouraging employee creativity. Likewise, (Dul, 2011) clarified twenty-one constituents progress innovation and creativity. Some of them to list are encounters in job, collaboration, job rotation, independency in the job, superior’s coaching, self-thought process, creative objectives, acknowledgment of creative ideas, incentives. Jiang et al., found that employee creativity and organizational innovation are significantly influenced by finest HR practices. The constituents in HR practices driving employee creativity are hiring and selection process, rewards, job design and teamwork but not training and performance appraisal. Anthony, 2000 considered twelve factors for actual organizational innovation viz; management support, customer attention, internal and external communication, HR policies, teamwork, management, knowledge supervision, creative development, strategic posture, simple structures, persistent advancement, technological application. The author mentioned these twelve elements cover the global aspects of an organization and management support initiated the most imperative factor as it contributes in instilling innovative culture, deploy modern structures and practices and invite innovation as a strategic advantage. Rohman et al., studied the relationship between numerous individual and organizational factors and their consequence on knowledge sharing behavior. Some of the variables considered in the study were management support, leadership, organization’s incentives and reward system, organizational culture and illustrated these angles possess
substantial association with knowledge sharing and also determine such behavior in an organization.
Marisa et al., methodical and structured literature on 102 research studies identified 31 sub-variables and derived into nine common elements for dealing with organizational creativity and established a conceptual model. The authors eliminated inappropriate, repeating variables and also those fall under common themes with different titles. Hence, this study considered major factors from (Marisa et al., 2008) to collect a likely number of pertinent factors. But, their study missed an empirical assessment of the recognized factors and unsuccessful to reflect contingency variables. Another study by (Fariborz, 1996) reflected fourteen contingency factors to study the association between structural complexity and organization size with organizational creativity. The findings showed structural complexity is dependent on the intricacy of procedures, ecological uncertainty, usage of facility and industrial companies, emphasize on technical, product and application of innovations. Whereas organization size is reliant on size of operational, environmental uncertainty, service and profits of business, technical and product highlight innovations. A recent study by (Khan, S. and Mohiya, M. 2020) considered crucial organizational factors of Saudi firms which affect the workers. Those organizational elements are thoughtful of employees’ reactions. Hence few factors were considered as sub-factors under main titles in present research. However, this study organized Exploratory Factor Analysis (EFA), however could not establish holistic dimensions. The findings confirmed training and brainstorming sessions; employee recognition and rewards; resources and fund allocation; employee competencies; work environment and management collaboration have a significant effect on employee creativity. Khan and Mohiya stressed that management support is leading element for a firm’s success only if it supports providing appropriate training on technology and work-related aspects, mobilizes the talents, deploy appropriate business models, and develop new policies and strategies. Inappropriately, the least coefficient value explained organizations give the least inclination to support their personnel creativity because of the prevalent dominating culture of employees in top job positions. (Atuahene-Gima, 1996; Balbontin, 1999; Keogh, 1999) highlighted HR strategies and identified the HR practices have a substantial role in dissemination of information and appropriate knowledge about creativity. Further, (Sirilli & Evangelista, 1998) augments technological innovation is vigorous for industrial and facility sectors, for which the workforce must be trained on modern technologies.
Cooperation of management is a big influencer to boost their manpower creative behavior by encouraging the creative ideas and relating them in daily work life (Atuahene-Gima, 1996; Balbontin, 1999; Spivey et al., 1997; Tang, 1999; Zhuang et al, 1999; Hurley & Hult, 1998). Tang, 1999; De Jong et al., 2007; Balbontin et al., 1999 study on leadership of managers’ exposed they are responsible to institutionalize pioneering strategies and can reinforce employees’ creativity. In the same way, another study by (Rosing et al, 2011) deployed the ambidexterity theory of leadership to recognize the unpredictable connections between leadership and innovation receptiveness of workers. Two types of leadership behaviors were used and entitled it as mirrors symmetry leadership, as the leaders can shift among opening and closing activities. It was identified the growth of rich ties between staff during the formal and informal dealings transferred the information and innovative behavior among the coworkers even when there is controlled power among the team members. De Clercq et al., study presented the
connection between employee creative susceptibility and hostile working environments. It described extra workload assigned by senior employees may degrade employee creativity. Therefore, leaders must deal sensitively in emerging relational conduits to solve employee work tensions. Many researchers studied organizational factors on innovation but with from a different perspective. Some of the studies are referred below in Table 1.
| Table 1 Identification of Factors and Development of Sub-Items. Source: Factors Identified From Literature Review |
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|---|---|---|
| S.No | Factorsand sub-items | Authors |
| 1 | Corporate Structure (CS) | Khan S. 2020; Marisa Smith et al., 2008; Mintzberg, 1992 |
| Our organization structure is differentiated with other firms (CS1) | ||
| Our organization is centralized in terms of structure (CS2) | ||
| Our organization is more formalized (CS3) | ||
| The organization size is big enough to define the hierarchical structure (CS4) | ||
| 2 | Corporate Culture and Environment (CCE) | Khan S. 2020; Marisa Smith et al., 2008 |
| Our organization encourages open communication (CCE1) | ||
| There is a fair cooperation among the peer (CCE2) | ||
| Our organization is prepared to face risk and environment certainty (CCE3) | ||
| All employees have the attitude to innovate (CCE4) | ||
| Our organization provides its employees independency at work (CCE5) | ||
| There is a dynamic work culture among all employees (CCE6) | ||
| Employees in all departments have team spirit (CCE7) | ||
| 3 | Organization Strategy (OS) | Khan S. 2020; Marisa Smith et al., 2008; Damanpour and Evan, 1984; Martins andTerblanche, 2003;Read, 2000 |
| Organization takes strategic decisions at all levels (OS1) | ||
| There is a culture of innovation at all levels (OS2) | ||
| Organization's vision and mission are very clear to all employees (OS3) | ||
| 4 | Innovation (I) | Khan, S. and Mohiya, M, 2020; Khan S.2020; Anthony R. 2000; Marisa Smith et al., 2008; Cummings and O'Connel, 1978; Merx- Chermin and Hijhof, 2005; Knight,1987; Amar, 2004;Bessant et al., 2005 |
| Employees have the ability to think creatively at work (I1) | ||
| Our organization selects and evaluates best innovative techniques (I2) | ||
| Our organization implements innovative mechanism (I3) | ||
| Our organization has series of phases in adopting the innovation process (I3) | ||
| 5 | Employees (E) | Khan, S.and Mohiya, M, 2020; Khan S.2020; Marisa Smith et al., 2008; Ahmed, |
| Our employees are highly competent (E1) | ||
| All employees are thoughtful about self-development (E2) | ||
|
|
Employees think creatively and generate novel ideas (E3) | 1998; Mostafa, 2005; Bharadwaj and Menon, 2000 |
| Our organization motivates employees to learn new things (E4) | ||
| Organization proactively conducts training and brainstorming sessions (E5) | ||
| There is regular performance appraisal and reward system (E6) | ||
| Best employees are rewarded accordingly (E6) | ||
|
6 |
Technology (T) | Khan S. 2020; Marisa Smith et al., 2008 |
| Organization promotes technology usage over manpower utilization (T1) | ||
| Employees are educated on latest technology to improve their technical skills (T2) | ||
| Organization deploys modern technology regularly (T3) | ||
|
7 |
Resources (R) | Nohria and Gulati, 1996; Knight, 1987; Subramaniam, M., & Youndt, M. A. 2005; Khan, S. and Mohiya, M, 2020; Marisa Smith et al., 2008 |
| Organization recruits international talents (R1) | ||
| Our organization simplifies its business process (R2) | ||
| Our organization well utilizes slack resources (R3) | ||
| Our organization plans well and manages its resources properly (R4) | ||
| Employees have easy access to knowledge, financial and technological resources (R5) | ||
|
8 |
Knowledge Management (KM) | Salavou, 2004; Khan S. 2020; Marisa Smith et al., 2008 |
| There is a culture of sharing knowledge among peers (KM1) | ||
| Our organization encourages employees to learn new things regularly (KM2) | ||
| Employees have knowledge on internal and external environment of the organization (KM3) | ||
| Employees can access knowledge repositories frequently (KM4) | ||
|
9 |
Management Support (MS) | Rivas and Gobeli, 2005; Khan S. and Mohiya, M, 2020; Marisa Smith et al., 2008; Pearson et al., 1989; Roffe, 1999; Hyland and Beckett, 2005 |
| Our management empowers its employees (MS1) | ||
| Organization is thirst for new business opportunities (MS2) | ||
| Organization recruits high competent applicants (MS3) | ||
| Management frequently monitors to practice fair HR policies (MS4) | ||
| Our organization leadership style is fair to all the employees (MS5) | ||
The major objectives for the proposed study based on the theoretical background are to understand the relationship between independent and dependent (EI) variables. Therefore, the following hypothesis were formulated to validate the data.
H1: There is a positive significant relationship between CS and EI
H2: There is a positive significant relationship between CCE and EI
H3: There is a positive significant relationship between OS and EI
H4: There is a positive significant relationship between I and EI
H5: There is a positive significant relationship between E and EI
H6: There is a positive significant relationship between T and EI
H7: There is a positive significant relationship between R and EI
H8: There is a positive significant relationship between KM and EI
H9: There is a positive significant relationship between MS and EI
The study was conducted in four-folds. Initially, it recognizes variables and sub-variables from the literature, then developing the survey questionnaire and collection of data finally conducting the data analysis. A well-designed questionnaire with 5-point Likert scale was developed based on the variables identified in literature. By adopting a quantitative research method and by using closed-ended questions appropriate responses were collected from two hundred and ninety-five (295) respondents from managerial level employees across different Saudi SEM companies. After deletion of missing data using case wise deletion it resulted in two hundred and fifty (250) respondents. Data analysis was done using SPSS (software package for social services) version 23. Table 1 represents the coding of all the sub-variables of employee creativity in an organization.
Table 2 shows the demographic data of the respondents. As shown in Table 2, the respondents age is within the range of 21 to 60 years and most of them are between 31 – 40 years (32.8%) and very few are 36 (14.4%) range from 21 – 30 years. 70% have 6 to 10 years work experience and 48 (19.2%) with 5 years or less experience. Most of them have master’s degrees
112 (52%) and 49 (19.6%), have Ph.D. 153 (61.2%) of them are employed in top level managerial positions and others at middle-level respondents are 110 (44%). 110 respondents (44%) are from medium size firms and 95 (38%) from enterprises.
| Table 2 Demographic Data of Respondents (N=250). Source: Primary Data Analysis |
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|---|---|---|---|
| Variable | Category | Frequency | % |
| Age | 21 - 30 years | 36 | 14.4 |
| 31 - 40 years | 82 | 32.8 | |
| 41 - 50 years | 70 | 28 | |
| 51 - 60 years | 62 | 24.8 | |
| Education | Bachelors | 71 | 28.4 |
| Masters | 130 | 52 | |
| Doctorate | 49 | 19.6 | |
| Organization | <500 employees | 95 | 38 |
| Size | >500 but <1000 | 110 | 44 |
| >1000 | 45 | 18 | |
| Designation | Top Level | 153 | 61.2 |
| Middle Level | 97 | 38.8 | |
| Experience | 1 - 5 years | 48 | 19.2 |
| 6 - 10 years | 75 | 30 | |
| 11 - 15 years | 67 | 26.8 | |
| 16 and above | 60 | 24 | |
Factorization Using PCA Method
All the sub-items under study were developed for the study and scaled to their corresponding constructs, the exploratory factor analysis determined the organizational factors (constructs) reliability and validity. Sampling adequacy is used to exam the factorability conditions and illustrates the Kaiser-Meyer-Olkin (KMO) value was 0.839 and a significant Bartlett’s test of sphericity value of 1684.54 for organizational factors indicating the correlation matrix is an identity matrix. Therefore, this demonstrates the data has acceptable factorability conditions.
Table 3 elucidates the summary of rotated factor matrix of organizational variables using Principal Component Analysis with Varimax rotation under Kaiser Normalization (Kaiser, 1958) and Table 4 shows the relationship among the organizational variables. The PCA method converged rotations into 8 iterations. All the sub-items were extracted into nine factors and accounted for 98.421% of the total variance. Only those factor loading above 0.50 were considered to be significant (Hair et al., 2006).
Corporate structure consists of four items ranging its component martrix value from 0.823 to 0.932; accounted for 6.382% of the variance. Corporate culture and environment with seven items ranging from 0.832 to 0.932 and accounted for 17.794% of variance. Organization strategy constitutes of four items ranging its value from 0.894 to 0.942 with 9.546% of variance. The innovation variable constitutes of three items ranging from 0.816 to 0.905 and accounted for 16.742% of the variance. Employees variable constitutes of six items ranging value from 0.800 to 0.892 and accounted for 22.448% of the variance. Technology constitutes of three items ranging from 0.773 to 0.882 and accounted for 5.439% of the variance. Resources variable consists of five items ranging its values from 0.802 to 0.901 and accounted for 12.684% of the variance. Knowledge management constitutes of four items with values from 0.823 to 0.892 and accounted for 2.497% of the variance. Management support constitutes of five items ranging from 0.799 to 0.932 and accounted for 4.889% of the variance.
The study illustrates all the identified factors except corporate strategy and corporate culture and environment established a significant positive relation with employee innovation.
Hence hypotheses H1 and H2 were rejected as data did not support and H3, H4, H5, H6, H7, H8 and H9 are accepted and supported by the data. Among all the factors, resources 0.875 and training 0.737 given to the employees explains a high significant relation with their innovation at p<0.001. While organization structure 0.481 and management support 0.457 are vital for any firm, they showed a moderate positive relation with EI and innovation 0.750,
employees 0.646, knowledge management 0.624 and management support 0457 are subsequent highest positive relationship with EI. This shows that corporate strategy and corporate culture and environment does not actively contribute for employee innovation rather are important for strategically growth of the organization in many other global aspects.
The findings of this research are also analogous with many other studies. Marisa Smith et al., 2008 mentioned the structure and strategy of a firm is favorable to actual innovation management and also delegates the job nature to its employees alongside strategy driving the organizational culture and familiarizes innovation process through firm’s vision and mission. Rohman et al., study revealed organization culture will positively influence the employees in sharing work related knowledge. Employees being human capital of a firm could be competent by facilitating training and empowerment programmes and even proper utilization of slack and financial resources could simplify and streamline the business (Khan & Mohiya, 2020). Employees’ innovation improves through internal and external organizational learning and sharing of such knowledge will develop knowledge repositories with the support of the management (Khan & Mohiya, 2020; Rohman et al., 2020). (Table 3, 4)
| Table 3 Rotated Factor Matrix. Source: Primary Data Analysis |
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|---|---|---|---|---|---|---|---|---|---|
| Item | Components | ||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
| CS1 | 0.846 | ||||||||
| CS2 | 0.823 | ||||||||
| CS3 | 0.932 | ||||||||
| CS4 | 0.847 | ||||||||
| CCE1 | 0.862 | ||||||||
| CCE2 | 0.832 | ||||||||
| CCE3 | 0.874 | ||||||||
| CCE4 | 0.932 | ||||||||
| CCE 5 | 0.863 | ||||||||
| CCE 6 | 0.882 | ||||||||
| CCE 7 | 0.854 | ||||||||
| OS1 | 0.942 | ||||||||
| OS2 | 0.901 | ||||||||
| OS3 | 0.894 | ||||||||
| I1 | 0.905 | ||||||||
| I2 | 0.816 | ||||||||
| I3 | 0.832 | ||||||||
| E1 | 0.832 | ||||||||
| E2 | 0.852 | ||||||||
| E3 | 0.801 | ||||||||
| E4 | 0.892 | ||||||||
| E5 | 0.852 | ||||||||
| E6 | 0.8 | ||||||||
| T1 | 0.773 | ||||||||
| T2 | 0.844 | ||||||||
| T3 | 0.882 | ||||||||
| R1 | 0.901 | ||||||||
| R2 | 0.881 | ||||||||
| R3 | 0.849 | ||||||||
| R4 | 0.871 | ||||||||
| R5 | 0.802 | ||||||||
| KM1 | 0.841 | ||||||||
| KM2 | 0.892 | ||||||||
| KM3 | 0.882 | ||||||||
| KM4 | 0.823 | ||||||||
| MS1 | 0.831 | ||||||||
| MS2 | 0.799 | ||||||||
| MS3 | 0.932 | ||||||||
| MS4 | 0.82 | ||||||||
| MS5 | 0.896 | ||||||||
| Initial Eigen Value | 3.401 | 2.954 | 2.461 | 2.264 | 1.582 | 1.478 | 1.548 | 1.183 | 1.321 |
| % Variance | 22.448 | 17.794 | 16.742 | 12.684 | 9.546 | 6.382 | 5.439 | 4.889 | 2.497 |
| Cumulative % | 22.448 | 40.242 | 56.984 | 69.668 | 79.214 | 85.596 | 91.035 | 95.924 | 98.421 |
| Table 4 Correlation Matrix. N=250, **: Correlation Is Highly Significant At 0.01 Level; *: Correlation is Moderately Significant At 0.01 Level |
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|---|---|---|---|---|---|---|---|---|---|---|
| Factors | CS | CCE | OS | I | E | T | R | KM | MS | EI |
| CS | 1 | 0.672 | 0.428 | 0.227 | 0.366 | 0.473 | 0.236 | 0.348 | 0.161 | 0.264 |
| CCE | 1 | .421* | .657* | .475* | .175* | .625** | .587* | 0.608 | 0.461 | |
| OS | 1 | .523** | .437** | .444* | .314* | .372* | .329* | .481* | ||
| I | 1 | .384** | .486** | .715** | .460* | .423* | .750** | |||
| E | 1 | .471* | .370* | .514** | .348* | .646** | ||||
| T | 1 | .754** | .688** | .324* | .737** | |||||
| R | 1 | .569** | .304* | .875** | ||||||
| KM | 1 | .523* | .624** | |||||||
| MS | 1 | .457* | ||||||||
| EI | 1 | |||||||||
This study identifies the relationship between various organizational factors and employee innovation. However, it could not demonstrate to address the statistical reduction of dimensionalities and the methods that are practiced among various organizations. Only holistic corporate elements were considered but lacked to study on specific industrial sector. The responses included only HR departments but not all the employees in other departments, so it lacks the ideas of general employees who also involve in innovation process at work. Therefore, more qualitative approach using Delphi or focused group studies are crucial and appropriate to collect employees’ viewpoints. Also, sometimes the work and organization culture differs among the firms of different region. Present study did not attempt to understand the effect of age, education, job experience and other demographic variables on employee innovation. Therefore, further researchers may conduct similar studies in different nations using these factors with more sample size and compare the results for further growth and development of the organizations.
The organizational factors influence innovation process and also strategically determine the organization’s success. This study examined the relationship between various organizational variables and employee innovation in Saudi SMEs. Majority of the factors gained a significant positive relationship with employee innovation which are consistent with other relevant studies (Khan & Mohiya, 2020; Anthony, 2000; Marisa et al., 2008). Khan & Mohiya in their study revealed the importance of organizational factors and their role in transforming the employees. The findings of this paper contribute to a better understanding of the various organizational factors holistically. Not only the study identified and validated the determinants, but it also contributes both in the theoretical and relational explanations of the organizational factors. The present findings are extremely appropriate to the context of SMEs. The study pointed, corporate strategy and organizational structure showed no significant correlation with employee innovation. Subramaniam & Youndt; Marisa Smith et al., stated the importance of resources in enhancing the innovation and generating new ideas at work. This shows the employees are better shaped and groomed with the availability of financial, knowledge and technological resources. Therefore, this study addressed the research gaps which were not addressed previously pertaining to Saudi SMEs.