How leaders influence employees’ innovative behaviour

How leaders influence employees’

innovative behaviour

Jeroen P.J. de Jong
EIM Small Business Research and Consultancy, Zoetermeer,
The Netherlands, and
Deanne N. Den Hartog
University of Amsterdam Business School, Amsterdam, The Netherlands

Purpose – To provide an inventory of leader behaviors likely to enhance employees’ innovative
behaviour, including idea generation and application behavior.
Design/methodology/approach – Based on a combination of literature research and in-depth interviews, the paper explores leadership behaviors that stimulate employees’ idea generation and application behavior. The study was carried out in knowledge-intensive service firms (e.g. consultants, researchers, engineers).
Findings – It was found that there were 13 relevant leadership behaviors. Although innovative
behaviour is crucial in such firms, it has received very little attention from researchers. Leaders
influence employees’ innovative behaviour both through their deliberate actions aiming to stimulate idea generation and application as well as by their more general, daily behaviour.
Research limitations/implications – Future quantitative research could condense our overview of leader practices, explore which practices are most relevant to employees’ idea generation and/or application behaviour, which contingency factors influence the leadership-innovative behaviour connection and provide information as to whether different practices are relevant in other types of firms.
Originality/value – Neither the innovation nor the leadership field provides a detailed overview of specific behaviors that leaders might use to stimulate innovation by individual employees. This paper fills that void.
Keywords Leadership, Innovation, Employee behaviour, Ideas generation, Knowledge organizations
Paper type Research paper


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Social responsibility

According to Wikipedia (2007) Social responsibility is an ethical or ideological theory that an entity whether it is a government, corporation, organization or individual has a responsibility to society. This responsibility can be "negative," in that it is a responsibility to refrain from acting (resistance stance) or it can be "positive," meaning there is a responsibility to act(proactive stance). Doing business is not just to comply the required laws and regulation or making huge profits from the market. Managers should have social responsibility, which is the responsibility beyond the stipulated laws and requirement to the social community or the public. Operating in the business environments, business are exposed to various publics whether it is internal or external environment. To be successful nowadays, the organization should have ethical principles that guide them to protect not only their interest but also to various public interest. From the perspective of internal environments, organization can ensure the social responsibility through its interaction with various internal parties such as workers, customers and suppliers. From ethical responsibility point, an organization should treat all its workers with fair judgment, good care to their safety and health, fair pay and promotion opportunities without discrimination to any. For customer and supplier, organization should treat customer and supplier with fair business practice and no cheating of terms that will affect any one of the business relationship.

For summary actually social responsibilities can be from these few criteria as discussed
Economic responsibilities – by some country law the corporation responsibility is to take care of shareholder (owner) interest and making healthy returns to them. Managers are only a representative for shareholder to manage their capital or investment in the corporation and managers are hired to ensure these assets are being managed well. However due to desire for instant success and financial rewards, some managers are acting out of shareholder economic interest by doing cheating and unfair business practices such as Enron and WorldCom cases. Acting solely on economic responsibilities will not ensure the organization gain support from the public. Organization must also think of other factor rather than only maximizing profits as there are trade-off between economic responsibility and social responsibility to the public.

Legal responsibilities – is the responsibility to understand and follow all the regulations and laws that set and required by the government, law enforcement agency and local council in order to keep on operating in the environment. Laws are set to dictate the business relationship in the market to protect all party in the business such as customers, consumer, public, customers, suppliers, employees and the business itself. For example, in term of customers they are protected their rights to get safety and health build in the product they bought, protected by fair pricing and protection mechanism that they can used when they feel cheated by the business practice. Public want their environmental cleanliness are protected by law for every business operating in their sites and employees are treated fairly according to the labor law. Business should follow the entire minimum requirement set by the law and if possible to more to protect the interest of various parties in the market. If the laws are not followed, the business will be fined or suspended from continuing their operation.

Social responsibility is the minimum requirement that the organization or corporate must do to protect the rights of

Discretionary responsibility is voluntary role after it serves the economic, ethical and social role. It is role beyond the requirement and if the organization can do it will build its image in the eyes of the public. For example by providing in the local communities, organization give aid to build a school for the communities. If they do not perform this voluntary act, they are not considered as unethical.

Merger and Acquisition Issue

1. In business world, the merger and acquisition has been one of the hottest topics nowadays. The term merger and acquisition or M&A is the corporate strategy, corporate finance and management dealing with merging buying and selling of different companies . Companies and business doing merger to enlarge market shares, economies of scales, cross selling, improve the competitive advantages, sharing of resources and expertise (synergy) of each others and to ensure the survivability of ever increasing competitive market. Examples of famous global mergers includes Citibank and Travelers Group (1999), Daimler and Chrysler (1998) and Exxon Mobil in 1998. In this case studies, merger between Chapters and Indigo become Indigo Books & Music which is the largest bookseller in Canada.

There are many issues to consider when doing merger between two different companies or entity. According to Robbins & Coulter (2005), organizational design involves six key elements which are work specialization, departmentalization, chain of command, span of control, centralization – decentralization and formalization. First issue to address is the work specialization where we have to look into the degree which activities in an organization are divided into separated jobs. In work specialization, work activities are divided into smaller task which a person will be focusing on one or few task rather than doing all the activities by themselves. When two different companies merge, the question of work specialization will pop out because we want to look into how the tasks are carried out by the employees. In the case of Indigo Book Store and Chapter merger, work specialization would be the same because both are from same industry and a big corporation in size. Most of the large corporation will perform some degree of work specialization to improve work productivity. For examples in an Indigo Book Store branch, there will be employees distributed among different task such as being a cashier, sales assistant or operation supervisor based on the needs of company and the capabilities and abilities of its employees. Work specialization is more prevailing in manufacturing sector where producer will take advantage of economies of scale to lower the cost of production. Specialization not only helps to improve productivity but also saves cost on training and ability to train workers to be skillful. However, the setback is boredom in repetitive job done by workers, low motivation due to perceived lack of importance in their job and higher turnover rate. So when designing or redesigning a new post merger organization structure, manager must think to what extent they want to apply work specialization in the organization.

Second question to address after there is some degree of specialization is if there is need for departmentalization? Normally when job is divided into smaller task for specialization, there are different types of departments exist where the workers will be reporting to based on their job cluster. For examples in a typical company organization there will be functional departments like Production, Sales & Marketing, Purchasing, Logistic, Human Resources and Finance. Each member of the departments is specialized in certain area of the job or key specialized skills such as material buyer in a purchasing department. According to Robbins & Coulter (2005) besides traditional functional departmentalization, there are others such as departmentalization by geography, products, process or customers. Big corporations may have more than one combination of these departmentalization based on suitability of the business they are doing.

Third issue is the chain of command where it concerns to whom the subordinates reports to and it’s a direct link between managers and subordinates. Post merger companies may see there are a lot of departments, groups, teams, and peoples that need to be integrated all together into one. For examples when two departments combined, who is going to be a manager or who is reporting to who issue will arise. Big corporations with more than thousands employees may see problems in integrating and clear have a visible chain of command division in short period. Designing a new organization structure must have a clear visibility of whom reporting to whom. With the development of technologies such as intranet and internet, employees are easily getting information which previously must go through their managers only. However, with this development importance and need of chain of command becomes blur and blur.

Fourth question is the span of control which is the degree where the managers will control the numbers of subordinates under him. How many subordinates will be efficiently or effectively manage by a manager? Narrow span of control will lead to tall organization where there are multiple reporting layers while wide span control will lead to flat organization with few layers of management and subordinates. There are conflicting views regarding how wide or how narrow the span of control should be. One thing of wide span of control is cost saving through elimination of headcounts as there are few layers of people compare to tall organization. A simulation of a companies with 1200 headcounts was done with Company A’s manager span of control covering 9 subordinates and Company B covering 5 headcounts. Company A need to use only 120 managers while B need to use until 200 managers. Imagine how much cost can be saved by lowering 80 headcounts of managers per annum? However question whether how wide the span of control must also consider the capabilities of the managers. Are they well trained to handle so many responsibilities compare to managers who have narrow scope of responsibilities?

A fifth issue to address is the term of decision making whether there is centralized or decentralized. If the decision making is the hand of top management such as senior managers, CEO and president, then it are a centralized organization. In big corporation where specialization is so viable with departmentalization, decision making is usually done functionally by department heads but the final say and direction is usually centralized to the top management. Small corporation which are more agile and those who need to adapt to changes quickly especially in high technology and creative industry are prone to decentralize the power of decision making to lower management. So the question whether to centralized or decentralized when designing a post merger organization will depends mostly on the pre-merger company’s culture, the type of industry where it play and the direction of the new top management. There is a clash of culture when Chrysler merged with Daimler Benz motoring unit where Chrysler open innovative and decentralized culture clash with Daimlers’ bureaucratic, hierarchical, formalities and a centralized conglomerate with well structured decision making. In the case of Indigo and Chapter merger, both have identical business ground but a post merger environment which is chaotic and unstable, so it needs to have a strong centralized decision making.

Formalization is part of the systems where rules and procedures are making known to all its members so that they can comply with it during their day to day operation. There are companies that full with formalities and standard working cultures such as IBM while one the other hand there are also companies that promotes loose and flexible working culture like Google. IBM before relaxation of culture by Louis Gertsner IBM has strong sales culture and earned the nicknamed Big Blue which signifies not just the corporate logo appearance but also the dark blue uniformed that the employees wear. Later in the 20th century, dark gray suit and white shirt has been IBM employee’s official dress code. When two organizations merged, this is the consideration that they must look into to see whether people from two diverse working or organizational cultures may adapt to each other. Formalization must make to known to all employees when design the new organization structure through rules and regulation, company procedures, company culture and etc in order to make them understand what company expect them to do.

In conclusion, managing a post merger company is not an easy task because we have to address the six important issues in reorganizing and redesign the new organization completely because people and organization from two diverse organization in term of culture, structure and system may not have adapt so easily. A manager or leader involves in redesign or reorganization of a merged company shall consider and analyze carefully the factors such as work specialization, departmentalization, chain of command, and span of control, degree of centralization & decentralization and formalization.

Trend in Operation Management

In operation management, there is trend of increasingly focuses on the core business activities. Corporation need to evaluate themselves and find the strength and weakness of each business units. As the competition in the market is getting tougher and lowering of barrier to entry causing corporations to focus only on their core competencies. Company may want to diversify by vertical or horizontal integration strategy but sometimes expanding to wide may spell disastrous if it is not manage effectively. Thus slim down and focus on core competencies where the companies is historical good at or have better capability is a safe bet to compete in the market. Few examples is the divest of Agilent semiconductor units to Avago to focus on traditional strong filed in testing and scientific equipment which is the best for the business compare to volatile semiconductor business.

There is also trend of modernization in factory setting and information technology. As technology’s cycle moves fast, there are a lot of modernization in factory equipment, machinery and a lot of automation that improves productivity and cycle time. This trend is obvious is newly industrialized country as being a technology follower they are able to adapt and implement latest technology improvement more rapidly than in the developed countries as they do not have large old scale industrial base. Telecommunication and internet technology improves the communication between markets and business in split seconds and low cost. There is no more barrier in business as location far away can be connected by this advance networks and thus improve the business operations. Software technology also progress and a lot of automation and software is used in factories and business outlets to manage the operation more effectively, better response to the customers and ability to do complex transaction in matter of seconds or minutes. Software are used in design, managing shop floor activities, managing inventories, managing workforce, calculate compensation, manage machines and productivity, office productivity, making decisions, managing transportation, testing products and etc.

Subcontractor or independent semiconductor factories also mushrooming in many industrialized countries as part of trend for corporation to focus on core activities. Company such as Advance Semiconductor Engineering are helping large semiconductor OEM to assemble and testing semiconductors without the needs of having their own facilities. Zarlink (formerly Legerity ©) is the example of fabless corporation that rely on ASE to assemble, test and ship its product to end customers. In other words, Zarlik only focus on high value activities such as engineering, research, design and marketing of their own product without hard to manage operational activities. Outsourcing becomes a trend and generates a new business especially in electronics and semiconductor market. In electronics market whether we realized or not, EMS companies such as Flextronics, Jabil and Fox Conn actually produce a lot of high end branded products from their customers such as Nokia’s handset, Sony’s Play station 3, Phillips LCD television, Microsoft Xbox, Apple’s iPod etc. Outsourcing become a trend as electronics become more complex as OEM cannot make all the parts on their own on time with effective cost management, cost saving for not having to invest in plants and equipments or labor in a volatile business and able to serve the market on time and reduce when needed.

Market trend also change rapidly as customer becomes better equip with knowledge and more demanding than before. Customers are concern with the image of the products, value for money as there are more budget conscious consumers, demand for more quality products and on time delivery. This is true for monopolistic market where there are a lot of competitors and substitutable products such as shampoo. Many competitors such as P&G, Kao and Head& Shoulder are trying hard to convince consumer by aggressive pricing and advertising activities. On distinctive value can create something special to the consumers and stay strong in the market. As consumers are more well verse with legal action, company also should be careful in producing and selling quality and safety product to the consumers. On time delivery is important in highly competitive market as customer may switch brand if they cannot get their needs fulfill on time when they need it.

Changing workforce is also a variable or trend that may affect the operation of the business in the highly competitive market. Workforce is changing with many knowledge workers in the market as increasing of education standard in many countries. Sometimes generation of graduates is much faster than they market can create jobs opportunity thus creating employment problem. With more skillful workers in market, there is a lot of changing in business, as we will have more high technology intensive industry and information technology business. The government want to enable creation of industry-needed workforce is emphasizing on education standard. Another change is more and more women are entering labor market, not in lower skills jobs but in high profile profession such as management and engineering. The changing scope of diversity in workplace is a thing that an operation manager should view and adapt to. As globalization take place, the mobility of labor from one location to one location or one country to another country will become easier than ever. Foreign workers are used in lower skills jobs because of lower cost and shortage of local resources.

Shorter life cycle of product means there is a lot of research and development has to be done. Customers’ needs, industry trends and technology cycle that change so fast means we have to be preparing to change or else we will be left behind compare to competitors. Electronics gadgets such as mobile phones change so fast from the color screen resolution, memory, camera resolution, and other special functions. If the producer continues to produce the same mobile phone like 3 years ago, no consumer will ever buy its products if the pricing is not low. Consumers who are fashioned and technology inclined will move towards changes and technology and market follower will soon influence the producer to produce the latest improved products in the market.