Power Distance a deterrent or facilitator for innovation

Int. J. Business Excellence, Vol. 5, No. 6, 2012 677

Copyright © 2012 Inderscience Enterprises Ltd.

Power distance: a deterrent or a facilitator for innovation

Sayan Banerjee* National Institute of Industrial Engineering (NITIE), PGP Hostel 1 and 2, Room No. 128, Vihar Lake, Mumbai, 400 087, India E-mail: [email protected] E-mail: [email protected] *Corresponding author

Dinesh K. Srivastava National Institute of Industrial Engineering (NITIE), Vihar Lake, Mumbai, 400 087, India E-mail: [email protected]

Abstract: The purpose of this research is to understand innovation and its relationship with its various correlates. Since it is difficult to measure innovation, hence, a measure of entrepreneurial strategy and organisational innovation devised by Miller and Friesen (1982) was used to do this work. In this work, I have tried to understand innovation by relating it to other variables like organisational structures, environmental uncertainty, etc. Though some work was done correlating innovation and entrepreneurial strategy, yet nothing much was done on the aspect of structural and cultural factors leading to innovation. In this work, some relationships from the literature have been analysed, keeping the aspect of power distance in mind. While examining innovation with regard to factors like organisational structures and environmental uncertainty, another variable known as innovation norm, was also taken into account. Implications can be discussed for the integration of this variables-innovation norms and power distance to extend theories of innovation and corporate entrepreneurship.

Keywords: organisational structure; environmental uncertainty; innovation; power distance.

Reference to this paper should be made as follows: Banerjee, S. and Srivastava, D.K. (2012) ‘Power distance: a deterrent or a facilitator for innovation’, Int. J. Business Excellence, Vol. 5, No. 6, pp.677–705.

Biographical notes: Sayan Banerjee holds a BSc in Chemistry and a Postgraduate in Personnel Management from Pune University. He is pursuing his Research Fellow (PhD) programme at the National Institute of Industrial Engineering (NITIE) in the area of organisational studies. He has quite a few publications in international journals and reputed conferences. His research interests are in areas like innovation, organisational structuring and design of organisations.

Dinesh K. Srivastava is working as a Professor (OB/HRM) in the National Institute of Industrial Engineering (NITIE), Mumbai. He received his Master’s in Psychology from the University of Allahabad and PhD in the area of organisational behaviour from the Indian Institute of Technology, Bombay. He

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has been teaching postgraduate courses in the area of organisational behaviour and has also published a book entitled Strategies for Performance Management. His research interests include organisational structures, job attitudes and performance management.

1 Introduction

Though some recent research has focused on innovation like many innovation researchers have also turned to network analysis to address questions about the innovation process because it is highly dependent upon the flow of ideas, information and skills that create new combinations of knowledge and technology (Mors, 2010), following a similar theme, Kastelle and Steen (2010b) were able to show that a small world structure could be demonstrated in a network of engineers designing a large industrial project. Most recently, a very large sample study has tested the small world hypothesis at the national network level using patent collaboration data from 11 countries (Chen and Guan, 2010), yet research concerning factors like innovation, organisational structure innovation norm, etc., were not dealt into much. While examining innovation with regard to factors like organisational structures and environmental uncertainty, another variable known as innovation norms, was also taken into account. Implications can be discussed for the integration of this previously unexamined variable-innovation norms and power-distance to extend theories of innovation and corporate entrepreneurship. This research should have a very high impact factor and should be very important for further research studies in India as very few studies have been done in the Indian context.

2 Literature review

Often it is seen that the best of mechanisms needed to usher in innovation fails. An important study in this regard is of Russell and Russell (1992) whereby he examined a variable called innovation norm with entrepreneurial strategy, along with some other variables. This study took this into consideration. And the next section deals with the major variables which are considered in this study.

Burgelman (1983) defined corporate entrepreneurship as “extending the firm’s domain of competence and corresponding opportunity set through internally generated new resource combination” (p.154). Schumpeter (1934), in his seminal work on innovation and entrepreneurship, viewed innovation as the creation of ‘new combinations of resources’. Combining these two perspectives, the practice of corporate entrepreneurship may be seen as the improvement of organisational competencies through innovation.

Van de Ven (1986) argued for a wide-ranging definition of innovation as the ‘development and implementation’ of a variety of new ideas, including technical, product, process, and administrative innovation. Adding Van de Ven’s perspective on innovation to the definition of corporate entrepreneurship further broadens the scope of corporate entrepreneurial activities. Corporate entrepreneurship now includes the

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initiation and implementation of a wide range of innovation as a means of creating and exploiting opportunities perceived in competitive environments.

Successful firms formalise this process, persistently gaining a competitive advantage through ‘new resource combination’ (innovation) as their main strategic thrust (i.e., 3M) or as the major element of a grand strategy (i.e., EG). Such an ‘entrepreneurial strategy’ entails the proactive search for new opportunities as well as the ongoing management of the process of innovation. This approach to entrepreneurial strategy creates a distinction between entrepreneurship as an ongoing process versus one-time only efforts to adopt innovation (Russell and Russell, 1992).

A notable recent research on this aspect was done by Pandey and Sharma (2009) whereby they provided a conceptual framework. Their study has attempted to find patterns and themes in the literature regarding the drivers that increases both sides of the organisational creativity; exploratory and exploitative. Pandey and Sharma (2009) explored the dimensions of organisational culture, innovation management, technology management and leadership style which are concerned for increasing creative output. Pandey and Sharma (2009) came out with a model depicting the complex relationship between factors like ideology, structure, communication mode, group process innovation out come, etc.

Figure 1 Different models of organisation factors

Source: Pandey and Sharma (2009)


Ekvall (1996) suggests that people who are innovative or creative often have a low tolerance of rules and routine work, but have a high tolerance of ambiguity and lack of structure.

Martins and Terblanche (2003) speculate that creativity and innovation will flourish only under the right circumstances in an organisation and under these circumstances, creativity and innovation can be influence by the several variables (these variables can be different for the innovation types that are exploratory or exploitative). Morris (2005) further explains that there is a systems view of creativity which suggests that creative outcomes are produced in a creative environment, where creativity as a culture is encouraged and rewarded. The study of Pandey and Sharma (2009) discusses those prominent factors which play as determinants of creativity culture and productive behaviour.

Some recent research have also concentrated on small world networks have since been identified in a very wide variety of contexts, including nervous systems, power grids, film collaborations between Hollywood actors and investment banking syndicates (Newman, 2003; Schnettler, 2009). Stuart and Sorensen (2007) suggest that network research in organisation studies usually assumes that network structures are exogenous, whereby actors are randomly assigned to network positions (Breschi and Catalini, 2010).

2.1 Significance of study

Entrepreneurial strategy is defined as a component of corporate strategy promoting the persistent search for competitive advantages through innovation. These efforts may compose a firm’s main strategic thrust or maybe a minor element of a broader grand strategy.

Successful innovation requires the effective management of innovation process. Zaltman et al. (1973) described innovation processes as being highly uncertain; innovators are unable to predict final outcomes and are unable to define the appropriate means of achieving any desired innovation prior to engaging in the process. Mintzberg (1983) described innovation based strategies as emerging from an often chaotic process of trial and error. Specific strategies coalesce around promising innovations only at the end of the development process. Because of this difficulty in planning and controlling innovation, entrepreneurial strategies appear to be ‘process’-oriented: that is, they seem to focus on the management of the context within which innovation occurs in order to create innovation-conducive structures and to stimulate innovation producing behaviours (Mintzberg, 1983).

Burgelman (1986) points out a similar role for strategy in entrepreneurial firms. Corporate entrepreneurship occurs because of the ‘autonomous strategic behaviour’ of operational level participants (i.e., through the innovative behaviour of organisational members). The primary role of strategy-makers according to Burgelman (1986) is “to select appropriate entrepreneurial initiative and to give them meaning in an enlarged concept of strategy of the firm”.

In Mintzberg’s (1983) terms, this paper addresses which contextual factors must be managed to stimulate effective innovation. In Burgelman’s (1986) terms, the model addresses which factors prior research indicates are likely to be associated with motivating ‘autonomous strategic behaviour’. The external and internal influences hypothesised to impact or stimulate effective innovation are described below, followed by presentation of an integrated model.

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2.2 Relationship between entrepreneurial strategy and effective successful innovation processes

Both the entrepreneurship and the innovation literatures were surveyed for guidance in developing a model for this work. One of the few sets of consistent findings in the innovation literature is that organisational innovation is positively correlated with environmental uncertainty (conceptualised in terms of complexity and dynamism, cf. McGinnis and Ackelsberg, 1983; Tornatzky et al., 1983). There are at least two possible explanations for this finding: high levels of uncertainty generate more innovation through opportunity-seeking and adaptation to change (Baldridge and Burnham, 1975; Miller and Friesen, 1984; Utterback, 1971) or increased levels of innovation create the perception of increased uncertainty among manager. For the entrepreneurial firm, however, uncertain environments are likely to provide a richer source of innovation opportunity than relatively certain ones (Utterback, 1971). Changes in customer demand, industry-related technology or strategic relationships between competitors offer corporate entrepreneurs an increased range and frequency of potential innovation. Thus, entrepreneurial organisations residing in relatively uncertain environments may be expected to adopt a greater number of innovations than those in relatively certain environments. Moreover, this is likely to be true of both entrepreneurial and conservative firms residing in uncertain environments (Miller and Friesen, 1982, 1984). Suggesting a reciprocal relationship, Miller and Friesen (1984) submit that entrepreneurial firms will naturally tend to seek out and exploit the richer innovative opportunities of dynamic environments. More conservative firms are likely to be forced into innovation in rapidly changing environments as a form of strategic adaptation (March and Simon, 1958; Miller and Friesen, 1982, 1984).

2.3 Different variables

2.3.1 Organisational structure

Definition: Organisation structure is comprised of functions, relationships, responsibilities, authorities, and communications of individuals within each department (Sexton, 1970).

Regardless of how external uncertainties affect the level of innovation, organisation must be capable of managing an inherently uncertain and ambiguous process to be successful at implementing an innovation-based strategy (Van de Ven, 1986; Zaltman et al., 1973). Zaltman et al. (1973) described the innovation process as being highly ambiguous in terns of the ability of innovators to predict the final outcome of the process and the ability to define appropriate means of achieving the desired innovation.

Van de Ven (1986) described innovation as a complex, ambiguous process that requires the management of an extensive network of personal and group interactions as a new idea moves from conception to implementation. The corporate entrepreneurship and the innovation literatures indicate that one method of managing the uncertainties of innovation is through organisational structure (Burgelman, 1983; Tornatzky et al., 1983). Results generally indicate a link between higher levels of innovation and more organic structures characterised by decentralisation, lack of formalisation, and high levels of complexity (Burns and Stalker, 1961; Pierce and Delbecq, 1973; Tornatzky et al., 1983).


Decentralisation: Given the uncertainties in creating successful innovation, firms following an entrepreneurial strategy cannot afford to rely on only a few innovation projects. They must generate and develop a large number of new ideas to realise even a few successful innovations. A relatively decentralised structure is likely to provide a context in which more new ideas are generated than a centralised one. Managers in a decentralised structure have more autonomy and more control over resources, enabling them to initiate and test a greater number of creative new ideas that eventually result in a larger number of innovations (Kanter, 1983). Cohn (1981), Hage and Aiken (1970), and Kim (1980) have operationalised decentralisation in terms of the degree of participation in decision-making. These studies indicate a positive relationship between innovation and degree of participation. The authors conjecture that increased participation in innovation decisions increases participants’ commitment to the new idea making implementation more effective. In the centralised organisation, new ideas must travel an extended chain of command before receiving approval and/or resource support. Centralised organisations increase the likelihood that promising new ideas will be screened out or that resources will be denied, reducing the number of innovations successfully adopted (Pierce and Delbecq, 1977).

Formalisation: Formalisation is the extent to which rules and procedures are written out and enforced (Sexton, 1970). Kanter (1983) and Van de Ven (1986) argued that the uncertain problems characterising innovation are best solved through mutual adjustment and informal information exchange. The intense exchange of information between innovation is likely to be facilitated by informal structures (Zaltman et al., 1973). Moreover, no formal procedure or set of rules can guide organisational members in solving the ambiguities of innovation because, by definition, innovation represents a new activity where rules and procedures have not been devised.

Complexity: Its vertical, horizontal, or geographical organisation determines complexity. Vertical hierarchies are defined by how many levels deep an organisation is. A complex organisation has many levels of successive power and expertise; where as a simple organisation will only have a few. Horizontal complexity is defined by the way in which tasks are subdivided (Sexton, 1970). Van de Ven (1986) noted that innovation is a collective activity requiring a set of diverse skills that are likely to be found in a complex organisation. Complexity is likely to be associated with increased innovation, creating an increased pool of diverse ideas generate by specialised personnel. These ideas become sources of potential innovation (Hage and Aiken, 1970). Although an organic structure (decentralised, informal, and complex) is likely to facilitate the process of innovation, it does not explain how that entrepreneurial process is motivated and guided. Structural forms alone cannot solve the ambiguous and unpredictable problems generated by the process of innovation. For example, no rule or procedure exists defining the ‘right’ way to be creative. Further, experience does not necessarily provide managers with guidelines or contribute an internal context that permits the social interaction and information exchange necessary for innovation to occur without constraints.

2.3.2 Innovation norms

Norms can be defined as a set of values or a set of contexts which an entrepreneurial strategy needs whereby participants value innovation and believe that it is an accepted expected response to environmental challenges (Russell and Russell, 1992). The four dimensions of innovation norm include [as per the Zaltman et al. (1973) model]:

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1 awareness of potential innovation

2 attitude formation towards the innovation

3 the innovation decision process

4 implementation.

The sub-dimensions are:

1 recognition of the creative activities of individual organisational members

2 search for innovative ideas outside of the organisation that may be applied inside the organisation to gain competitive advantage

3 free and open exchange of information within the organisation

4 recognition of innovation as an important organisational activity

5 support for moderate risk taking in new ventures

6 open minded consideration of new ideas regardless of their source

7 stimulation of commitment for promising new ideas by providing emotional and resource support to idea champions

8 support for initial and maintained implementation of innovation.

Russell and Russell (1992) and Kimberly (1981) noted that effective innovation requires not only external stimulants but also internal receptivity to change. He observed that many attempts to innovate fail because of internal resistance to change. The innovation is simply perceived by organisation participants as incompatible with “existing configuration of interests and resources” (Kimberly, 1981). In order to overcome innate resistance to change, entrepreneurial strategies require a context in which participants value innovation and believe that it is an accepted and expected response to environmental challenges. Specifically, organisational members involved in entrepreneurial ventures must value and practice the behaviours that compose the complex social process that innovation entails. A complete model of corporate entrepreneurship must provide a means of explaining how such beliefs and behaviours become valued and integrated into the ongoing routine of entrepreneurial organisations.

Ouchi (1980) described a system of organisational direction and control that might provide such an explanation. They viewed ‘clan’ or cultural control as a way of managing interpersonal transactions in uncertain situations where formal organisational or market controls are absent. Clan control operates through value and belief systems that are imparted to organisational members through various socialisation processes. Reinforcing these appropriate actions in uncertain contexts such as innovation, norms and shared beliefs becomes the primary source of guidance because formal organisational procedures become ineffective.

The relevance of such an implicit control system to an effective innovation process was illustrated by Weick (1987), who viewed strategy as analogous to a map. Strategies, like maps, are effective when they generate purposeful action in unknown environments. According to Weick, these actions serve to create meaning and impose order on


ambiguous circumstances by generating outcomes that are rationalised post hoc by organisational participants. In this sense, strategies create action rather than actions being defined a priori through an organisationally sanctioned pre-existing sense of order. This perspective is especially useful when applied to effective innovation outcomes that are inherently uncertain because of the nature of innovation. Organisational culture is influential in this situation because it can create an expectation of appropriate order that sanctions entrepreneurial activities. In turn, the entrepreneurial actions of organisational participants create the innovations that are turned into the sources of competitive advantage for the firm.

In the innovative organisation, culturally-derived norms and beliefs are likely to establish a setting where innovation is an accepted and appropriate response to organisational problems. Innovation-supporting behaviours are encouraged through norms, whereas innovation-resisting behaviours are discouraged. Current models of innovation outcomes contain no variables that measure this influence.

2.3.3 Culture and its effect (power distance)

A primal purpose of this work was to gauge the usability of power distance as a moderating variable. Interest in the impact of culture on various organisational behaviours has been increasing since Hofstede (1980) published his seminal work on cultural dimensions of work values. Initially, the cultural concept was applied at the societal level, but more recent research has been concerned with measuring cultural aspects of behaviour at the individual level. McSweeney (2002) identifies a paradigmatic perspective where McSweeney argues against Hofstede’s logic and where he rejects Hofstede’s paradigm and premises. This indicates that both the functionalist and other paradigms are needed for future research into national culture and for understanding social behaviour in different national cultures. The same fact was reiterated by Williamson (2002). Furthermore although many researchers believe that cultural values are enduring (cf. Hofstede, 1980), they are influenced by socialisation processes. Is it possible, then, that through organisational socialisation processes, an individual could change his or her cultural values (Francesco and Chen, 2000)? For example, when people choose to work for a global company whose values vary from their own national cultural values, over time will the individuals’ values change to be more congruent with the organisation’s (Francesco and Chen, 2000)? Hence, implications and further research can always happen and enrich management literature by taking power distance as a moderating variable.

Definition of power-distance: Power distance in a given society is an indication of how it deals with the fact that people are unequal in their physical and intellectual capabilities (Hofstede, 1991). It basically refers to the perceptual distance in the mind of an individual in terms of power in general or status in any formalised relationship.

Hofstede (1991) suggests that organisations in societies (such as Japan) with a large power distance and strong uncertainty avoidance will tend to be structured as ‘pyramids of people’ defined by hierarchical structures. Organisation in societies (such as the USA) with a small power distance and low uncertainty avoidance will tend to be structured as ‘village market’ and have specialised functions organised in a more horizontal and flexible manner. He studied the influence of Japanese and US values on organisational structure and found that Japanese structures were less specialised and had taller hierarchies and greater formal centralisation than did those in the USA. If researchers

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analysed this case according to Hofstede’s work, they would conclude that there will be a culture clash, as Japanese management, with Japanese employees, with US-based values, would not fit into the US value system, and to succeed within the organisation.

2.3.4 Environmental uncertainty

The innovation literatures were surveyed for guidance in developing a model of effective innovation. One of the few sets of consistent findings in the innovation literature is that organisational innovation is positively correlated with environmental uncertainty (conceptualised in terms of complexity and dynamism, cf. McGinnis and Ackelsberg, 1983; Tornatzky et al., 1983). There are at least two possible explanations for this finding: high levels of uncertainty generate more innovation through opportunity-seeking and adaptation to change (Baldridge and Burnham, 1975; Miller and Friesen, 1984; Utterback, 1971) or increased levels of innovation create the perception of increased uncertainty among managers. For the entrepreneurial firm, however, uncertain environments are likely to provide a richer source of innovation opportunity than relatively certain ones (Utterback, 1971). Changes in customer demand, industry-related technology or strategic relationships between competitors offer corporate entrepreneurs an increased range and frequency of potential innovation. Thus, entrepreneurial organisations residing in relatively uncertain environments may be expected to adopt a greater number of innovations than those in relatively certain environments. Moreover, this is likely to be true of both innovative and conservative firms residing in uncertain environments (Miller and Friesen, 1982, 1984). Suggesting a reciprocal relationship, Miller and Friesen (1984) submit that proactive firms will naturally tend to seek out and exploit the richer innovative opportunities of dynamic environments. More conservative firms are likely to be forced into innovation in rapidly changing environments as a form of strategic adaptation (March and Simon, 1958; Miller and Friesen, 1982, 1984).

2.4 Relation between corporate entrepreneurship and innovation

Hence, corporate entrepreneurship is broadly conceived here to include firms engaging in single infrequent efforts to gain advantage through innovation and firms engaging in persistent patterns of innovation. In contrast, an entrepreneurial strategy involves a persistent organisationally sanctioned pattern of innovation related activities and resource allocation that composes one component of the firm’s comprehensive corporate strategy. A successful entrepreneurial strategy would produce innovations that add value to the firm. Thus, a corporation could be conceived of as pursuing an entrepreneurial venture but not following an entrepreneurial strategy (Russell and Russell, 1992).

Despite a recent surge of interest in relating corporate entrepreneurship and its sub-topics with innovation little progress has been made in developing empirically supported theories.

The process of globalisation, technological change and intensification of international competition has produced a series of changes, in the organisational forms which are well established in the literature. This includes the delivering of the organisation, the greater use of techniques such as total quality management (TQM), quality control (QC), team work, etc. All these things are leading to a wider spread adoption of information technology and multitasking, improved communication centre systems and more participatory form of management.


3 Rationale of the study

From the above review of literature, it came to light that though the number of studies done relating to innovation has increased yet many areas are as yet unexplored and some of these gaps are highlighted in the next section.

3.1 Gaps identified

1 Though investigators have examined the impact of organisations structural and environmental characteristics on innovation yet the relation between important variables like innovation norm (Zaltman et al., 1973) different sub-dimensions of culture like power distance were not much investigated with respect to effective innovation processes.

2 Though work on innovation and organisation has been going on in Western countries in India the research on organisational structures and innovation though primarily started by Khandwalla (1977) is again on wane.

3 Innovation that too taking organisation as a unit of analysis studies relating to that almost non-existent in India.

4 Apart from this, existing variable like environmental uncertainty whose relationship with innovation has been tested was also not tested much together with the structure and cultural variables and sub-dimensions. To understand the relations the framework has been used.

3.2 Conceptual framework

Figure 2 provides a partial summary of the relationships that will be addressed in this research. Organisational structures and environmental uncertainty variables have a history of demonstrated relationships with innovation. The purpose of the current study is to evaluate the relative contribution of two variables namely innovation related norms and power distance to the explanation and prediction of innovation processes and their organisational outcomes. Hence, successful innovation outcomes are seen as a direct function of organisational structure, environmental uncertainty, and innovation related norms. Organisational structure and innovation implementation are also hypothesised to have an indirect effect on entrepreneurial strategy through their impact on innovation norms. However, the innovation process itself is motivated and directed primarily by the values, beliefs and norms of the organisation’s culture. Culture affects innovation by:

a motivating organisational members to pursue innovation as an ongoing practice

b defining expected, appropriate innovation related behaviours.

This initial model of innovation implementation considers formal structural context as a constraint or aid in the innovation process. Organic structures (decentralised, informal and complex) facilitate innovation by allowing participants access to power resources and information needed to initiate and develop new ideas. The external environment provides idea and opportunities to organisational innovators and is the final judge as to whether an innovation succeeds or fails.

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Figure 2 Conceptual framework of the study

Finally, this model must be described as a partial summary of relationships suggested in the literature for at least two reasons. First, many relationships among these constructs have been demonstrated in the literature but do not have a hypothesised relationship, with innovation. Although important to a broader understanding of organisations, relationships not directly or indirectly tied to innovation and entrepreneurial strategy has been excluded from the model. Second, any comprehensive model of innovation must incorporate notions of reciprocal influence and/or feedback loops over time. The current study is cross sectional; hence issues of reciprocal causation over time will not be examined. In this measure of innovation related norms, and power distance is used and evaluated in the limited context of two demonstrated antecedents, organisational structure and environmental uncertainty.

3.3 Problem statement

Thus, we see that a linear relationship between the factors correlating the two variables innovation and organic structure may not hold in many cases. Like for instance in India where power distance is very high maybe it is just not enough to just decentralise the existing system to usher in innovation, in that case the importance of culture or innovation norms can be very important for a particular company to have a sustained atmosphere conducive for innovation. That is why more research should be concentrated on this area where the social climate of the country is very different from the European or US settings. In this research it will be ascertained whether the relation between variables like effective innovation implementation. Innovation norms environmental uncertainty, organic structure still holds good when examined through power distance and innovation norms.


3.4 Research questions

• What is the relation between innovation norms and effective innovation outcome?

• How are innovation norms important in explaining the influence of decentralisation and environmental uncertainty on effective innovation outcome?

• How does power distance help to explain the relationships between decentralisation and effective innovation outcome?

• How does power distance help to explain the relationship between complexity and effective innovation outcome?

• How does the above question help us to understand manufacturing and non-manufacturing companies?

3.5 Objective of the study

The objective of the study is to examine the effect of innovation norms, organisational structures environmental uncertainty and power distance (independent variables) on effective innovation outcomes (dependent variable).

3.6 Hypotheses (major)

H1 There will be a positive correlation between effective innovation outcomes and the existence of a set of organisational norms that support innovation.

The effect of organisational structure variables and environmental uncertainty on entrepreneurial strategy is hypothesised to work indirectly via their influence on innovation-related norms.

This leads to a second hypothesis:

H2 Innovation-related norms will influence the relationship between organisational structure, environmental uncertainty and effective innovation outcomes.

Note that each of these hypotheses employs effective innovation outcome as the dependent variable.

Power distance is unique for any given culture and thus can act as a very important factor to understand the relationship between two variables in a given context.

H3 Power distance will influence the relationship between decentralisation and effective innovation outcome.

H4 Power distance will influence the relationship between the complexity and effective innovation outcome.

H5 There will be a positive correlation between effective innovation outcomes with organisational structure and environmental uncertainty.

H6 Power distance will influence the relationship between effective innovation outcome, organisational structure and environmental uncertainty.

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H7 Effective innovation outcomes will be positively related to innovation related norms, power distance, environmental uncertainty and organisational structures.

Then the research has tried to extend this set of hypothesis to the manufacturing and non-manufacturing companies. The statistic for this is given in the data analysis section.

4 Methodology

A mixture of both surveys as well as participant observation was taken as the sample size for this research was small. For maximising effectiveness it was decided to use the quasi experimental design for this study. The quantitative approach yielding empirical data which could be statistically analysed was chosen. The study was designed to be relational. Non-probability sampling methods was used. And within it random sampling was done Primary data was collected using the questionnaire administration and participant observation method for all the variables in the study. The cross sectional method was adopted (rather than longitudinal), i.e., the study was done at one point in time.

For this research an unusual amount of time was spent by the researcher as a participant observer. This type of studies is most frequently used in anthropological type of study? The reason for this method was the desire to see the innovation implemented in organisations for a better understanding. Majority of the times the innovation that was experienced by the researcher in organisations was of product or process type. The following classes of innovation were mainly observed.

Engineering/technical innovations

1 existing product modification

2 new product creation

3 incremental additions or changes in existing product

4 existing process modification

5 alteration in temperature, heat transfer, exothermic and endothermic reactions to bring about a more optimal process

6 new process for optimal cost of production.

Existing product modification: In case of pharmaceutical industries it is usually addition of new molecules to existing products for

1 making the product useful for a wider amplitude of diseases

2 making the drug more cost effective.

New product development is seen in nearly all types of engineering industries but mostly in electronics and machine tool manufacturing companies. Process modification can again be following types:


1 Heat transfer (steel and other heavy industry).

2 Waste treatment/minimisation (textile industry).

3 Mass transfer – phrase is commonly used in chemistry/engineering for physical processes that involve molecular and convective transport of atoms and molecules within systems. In the companies that are surveyed for this research though mass transfer is a important mechanism everywhere as a part of process engineering yet it becomes most important in companies manufacturing cooling towers, boilers, etc., where hot water flows down over the fill material as air flows up and contact between water and air evaporates some of the water. Mass transfer finds extensive application in chemical engineering, fertiliser, cement and pesticide industries. Often, chemical species transfer between two phases through an interface or diffusion through a phase. The driving force for mass transfer is a difference in concentration; the random motion of molecules causes a net transfer of mass from an area of high concentration to an area of low concentration.

4 An important product strategy for firms in mature markets is value-adding modifications to existing products. Product modification is present if a product present on the market is changed in such a way, which appears it to the market as more or less new product. Seen mostly in electronics, consumer goods machine tool companies, etc. The following characteristics were seen to be changed:

• Physical characteristics (e.g., different material)

a aesthetic characteristics (e.g., different surface, colour)

b symbolic characteristics.

Alteration in temperature like tampering with exothermic and endothermic reactions in boilers, cooling towers etc were seen to be the most important innovation for heavy engineering like steel, cement, ship building, etc.

Non-engineering/non-technical service innovation

1 Existing service modification in case of hospitality industry: Service modification was mainly seen in companies in hospitality centre, and actually encompasses a very wide area, right from keeping a towel in a particular way to a unique way of arranging dishes on the table.

2 Existing idea or creating of an idea in case of advertising and service industry: In case of advertising industries a very interesting thing was seen for developing an idea. Whenever a client came with the product for which the advertising services were supposed to be rendered members of the creative team of the advertising agency was asked to think about the different aspects of the product with which they associate themselves in everyday life. The product say towel, was then thought upon by the individual members of the creative team to give suggestions which were put up in an idea box to be discussed and enumerated by visualisers to come out with the final advertising campaign.

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Though not from a technical back ground the researchers’ interest in innovation was to understand and interact with the innovation implementers.

4.1 Measurement

4.1.1 Sample

The unit of analysis in this research was organisations. Many firms were approached out of which some responded. The firms randomly selected were from various industrial categories based all over India. Questionnaires were administered to the top managers/CEO’s of each firm. Since each respondent has to fill a 154-item questionnaire and also fill it seriously which takes time and energy – therefore the sample size had to be small. Also there was the time constraint for data collection which had been targeted as one year. Total 58 companies were surveyed with a total sample size of 63.

The non-probability sampling method was used. These managers were selected by the companies to represent the company who were then asked to complete a questionnaire on strictest conditions of confidentiality – often the researcher had to sign a agreement or give it in writing about the full assurance of the study being done only for academic purpose and in no circumstance will the company be mentioned in this report or otherwise. The extra copies of these questionnaires were distributed to managers who had recently experienced the initiation or adoption of any of the following types of innovation as mentioned above.

a new products or services

b new processes

c new organisational systems

d new market applications of existing products or services

e new organisational structures

Primary respondents were senior managers/technical heads who were involved in recent innovative ventures. However, it will be impossible to determine every respondent’s role in the organisation because providing information about job content will be optional for purposes of confidentiality.

4.2 Data collection

All the respondents were requested to fill the questionnaires in the presence of researcher. It was not sent by e-mail or posted to any respondent. Though more effort/work was required to accomplish this, it ensured more accurate, serious filling as well as to prevent any misuse of the questionnaire. No time limit was given, however it was generally seen most respondents took a fairly long amount of time. As none of the respondents knew what variable was being tested apart from the fact that they knew the work was about understanding innovation and the fact that company will not be mentioned in any way ensured that socially desirable answers were minimised.


All respondents were in the age group of 38–62 post graduates or higher in educational qualification including PhD. There was a 90–10 ratio of male and female respondents.

4.2.1 Reasons for a low sample size

1 The type of study that was undertaken has a focus on top notch functionaries of the organisations. It is mainly because of the fact that these people are responsible for designing and maintaining the organisational systems. Hence, questionnaire was only administered to those people who can perceive the implementation aspects of what they have designed. In fact organisational design demands very close attention given to the parameters of change and evolution of change process. The sample is therefore justifiable in view of the nature of the study.

2 For such types of studies unit of analysis should be organisations, hence evaluation of organisation was done by using only those responses which can answer the specific questions connected to design and implementation process of management and innovation programmes. The questionnaires that were used for this research were all established questionnaires and consisted of statements regarding programme development, innovation creation, innovation implementation and frequency of innovation items.

3 The researcher spent considerable of his time with those who are programme designers or implementers as participant observer. In a way, my study is an anthropological type covering in depth aspects of innovation process and perceived structural and cultural factors associated or which can be associated with innovation.

4 In fact statistical tests stated that a size of the sample of 42 individuals is good enough to achieve a statistical power of .90 (Kirk, 1982). If the researcher is deeply involved in an in depth data collection process such as clinical interviews, closely observing what is going on in an organisational environment and then inferring certain attributes of the organisation and also the change processes that are noticeable through observation, then all of these taken together are sufficient reasons to depend upon a small size of sample.

5 While the data has been collected the researcher spent altogether one year with 58 companies spending three/four days in each organisation.

6 The basic perception on which this study is based is to get a true picture of the different variables in a real and interactive context. From this perception, it was conceptualised that questioning and interviewing structural and innovation implementers will provide us the correct and right details with respect to the critical research questions.

7 This research has been a humble attempt to throw some light on the research questions it has addressed. Very few studies perhaps with the exception of Chattopadhay (1973a, 1973b) have been attempted in India. Therefore, there seems to be a good scope for the present study for an in depth analysis of interview based

Power distance 693

data and applying quantitative techniques on the questionnaire response simultaneously obtained from the targeted sample.

4.3 Ethical consideration

Five important ethical issues were taken care of in this study:

a voluntary participation

b informed consent

c confidentiality and anonymity

d no risk of harm

e right to harm.

4.4 Questionnaires

4.4.1 Independent variables

Following scales were used for the study

a centralisation (Hage and Aiken, 1970)

b formalisation (Van de Ven and Ferry, 1980)

c environmental uncertainty (Miller and Friesen, 1983b)

d innovation norm (Zaltman et al., 1973)

e power distance

f complexity (Pertusa-Ortega et al., 2010)

Centralisation

The Hage and Aiken (1970) centralisation instrument will be modified to contain only items dealing with the frequency and importance of participation in innovation-related decisions. Items related to participation in promotion and selected decisions will be deleted because they did not affect the domain of innovation decisions with which this study is concerned. The resultant item pool will be asking for three responses:

a the degree of autonomy in innovation-related decisions

b the frequency of participation in innovation-related decision

c the amount of influence in innovation-related decisions.

The Cronbach alpha reported was above .9.


Formalisation

The Van de Ven and Ferry (1980) instrument measuring formalisation was used. The Cronbach alpha reported was above .9.

Complexity

The 2010 questionnaire on complexity of Pertusa-Ortega et al. was used. The Cronbach alpha reported was above .9.

Environmental uncertainty

Utterback (1971) conceptualised environmental uncertainty as the degree of complexity in external relations and the rate of change among important elements of the external environment. Miller and Friesen (1983b) operationalised uncertainty using ten items to capture these two dimensions. Two items concerning the predictability of raw material supplies and financial capital were added. Raw materials and capital are important inputs for most firms and any unpredictability in their supply is likely to increase a firm’s perception of uncertainty. Moreover the process of acquiring financial capital and raw materials is part of a firm’s value chain (cf. Porter, 1980) and, therefore, offers the opportunity for creation of innovative practices that may become sources of competitive advantage. The Cronbach alpha reported was above .9.

Innovation norms

No measures of organisational norms regarding innovation could be found in the literature. To develop a norm measure, the Zaltman et al. (1973) model of innovation will be used as a framework to survey the literature for examples of behaviour related to the innovation process. Eight dimensions of innovation-related behaviours and cognitions around which organisational norms might be likely to exist were identified by Zaltman. A number of specific norm statements were generated (Zaltman et al., 1973) referring to each dimension of innovation-related behaviour. Items drawn from these eight dimensions may embody a non-deficient sample of a uni-dimensional construct domain (i.e., a global innovation-related norm construct) or may reflect eight distinct innovation-related norm constructs. This was further expanded by Russell and Russell (1992) who developed a 34-item questionnaire. The Cronbach alpha reported was above .9.

Power distance

Power distance was measured using Erez and Earleys questionnaire. This is taken as their work in one paper actually was about taking power distance as a moderating variable. The Cronbach alpha reported was above .9.

4.4.2 Dependent variable

In order to understand innovation or effectiveness innovation outcome was measured using a scale developed by Miller and Friesen (1982). It actually measures the perceived importance, orientation and relative frequency of successful innovation within a business

Power distance 695

unit. For the purposes of this research, however the Miller and Friesen scale was not expanded any more unlike Russell and Russell (1992) who expanded the questionnaire to include measures of the frequency and importance of innovations in organisational processes, systems, structures, and market applications. The Cronbach alpha reported was above .9.

5 Results and analysis

5.1 Introduction

The primary objective of the data analysis was to ascertain whether the hypothesis that we are proposing is right or wrong. It should be noted that Hypothesis 1–7 which forms the basis of this work forms the primary hypothesis group. Hypothesis 8–14 is actually a repeat of the same hypothesis for manufacturing companies while 14–21 is for non-manufacturing companies. Multiple regression was used to test the different hypothesis. Different correlations between the different variables according to the model of study were tested to understand the efficacy of the experimental framework.

5.2 Data analysis tables

Table 1 Descriptive statistics

Variable Mean S.D.

Effective innovation 293.1111 41.97513

Env_unct 78.5741 10.13606

Complexity 17.4630 4.41999

Centra 24.4630 4.25912

Power_distance 20.7593 4.54302

Innovation_norms 162.2222 16.62990

Formalisatio 13.2407 4.18864

Org_stru 55.1667 8.24564

Table 2 Correlation matrix

Effective innovation Power_distance Innovation_norms Env_unct Org_stru

Effective innovation 1

Power_distance –.277 1

Innovation_norms .167 –.080 1

Env_unct *.567 –.034 .116 1

Org_stru .520 .038 –.036 .266 1

Note: *Correlation is significant at 0.05 level (two-tailed).


Table 3 Results of the research

Hyp

othe

sis

Dep

ende

nt v

aria

ble

Med

iatin

g va

riab

le

Inde

pend

ent v

aria

ble

r r

squa

re

Beta

F

valu

e Si

gnifi

canc

e

1 Ef

fect

ive

inno

vatio

n

Inno

vatio

n no

rm

.158

.0

25

158

1.32

3 .2

55

2 Ef

fect

ive

inno

vatio

n In

nova

tion

norm

1

Org

stru

ctur

e .6

92

.478

1

.423

23

.386

.0

00

2

Envi

ronm

enta

l unc

erta

inty

2

.443

3

Effe

ctiv

e in

nova

tion

Pow

er d

ista

nce

1 C

entra

lisat

ion

.011

.0

00

.081

.0

07

.936

4

Effe

ctiv

e in

nova

tion

Pow

er d

ista

nce

1 C

ompl

exity

.5

40

.254

17.7

03

0.00

0 5

Effe

ctiv

e in

nova

tion

1

Org

stru

ctur

e .6

84

.468

1

.397

22

.458

.0

00

2

Envi

ronm

enta

l unc

erta

inty

2

.461

6

Effe

ctiv

e in

nova

tion

Pow

er d

ista

nce

1 O

rg s

truct

ure

.690

.4

77

1 .3

70

23.2

24

.000

2 En

viro

nmen

tal u

ncer

tain

ty

2 .4

80

7 Ef

fect

ive

inno

vatio

n

1 O

rg s

truct

ure

.745

.5

55

1 .4

17

15.2

86

.000

2 En

viro

nmen

tal u

ncer

tain

ty

2 .4

36

3

Pow

er d

ista

nce

3 .2

69

4

Inno

vatio

n no

rms

4 .1

01

8 Ef

fect

ive

inno

vatio

n

Inno

vatio

n no

rm

.11

.012

.6

32

.400

.5

32

9 Ef

fect

ive

inno

vatio

n In

nova

tion

norm

1

Org

stru

ctur

e .7

92

.627

1

3.02

26

.008

.0

00

2

Envi

ronm

enta

l unc

erta

inty

2

5.39

10

Ef

fect

ive

inno

vatio

n Po

wer

dis

tanc

e 1

Cen

tralis

atio

n .0

86

.007

–.

489

.239

.6

28

11

Effe

ctiv

e in

nova

tion

Pow

er d

ista

nce

1 C

ompl

exity

.5

39

.290

3.

617

13.0

86

.001

Power distance 697

Table 3 Results of the research (continued)

Hyp

othe

sis

Dep

ende

nt v

aria

ble

Med

iatin

g va

riab

le

Inde

pend

ent v

aria

ble

r r

squa

re

Beta

F

valu

e Si

gnifi

canc

e

12

Effe

ctiv

e in

nova

tion

1

Org

stru

ctur

e .7

8 .6

14

1 5.

38

24.6

17

.000

2 En

viro

nmen

tal u

ncer

tain

ty

2 2.

85

13

Effe

ctiv

e in

nova

tion

Pow

er d

ista

nce

1 O

rg s

truct

ure

.787

.6

19

1 5.

26

25.1

55

.000

2 En

viro

nmen

tal u

ncer

tain

ty

2 2.

70

14

Effe

ctiv

e in

nova

tion

1

Org

stru

ctur

e .8

17

.667

1

4.96

14

.55

.000

2 En

viro

nmen

tal u

ncer

tain

ty

2 2.

85

3

Pow

er d

istan

ce

–2.1

13

4

Inno

vatio

n no

rms

–.52

6

15

Ef

fect

ive

inno

vatio

n

Inno

vatio

n no

rm

.328

.1

07

1.47

2.

163

.159

16

Ef

fect

ive

inno

vatio

n In

nova

tion

norm

1

Org

stru

ctur

e .5

99

.359

1

2.95

4.

75

.023

2 En

viro

nmen

tal u

ncer

tain

ty

2 .1

46

17

Effe

ctiv

e in

nova

tion

Pow

er d

ista

nce

1 C

entra

lisat

ion

.288

.0

83

1.27

5 1.

625

.219

18

Ef

fect

ive

inno

vatio

n Po

wer

dis

tanc

e 1

Com

plex

ity

.425

.1

81

1.99

1 3.

996

.062

19

Ef

fect

ive

inno

vatio

n

1 O

rg s

truct

ure

.783

.6

14

1 .2

19

4.14

8 .0

34

2

Envi

ronm

enta

l unc

erta

inty

2

2.72

20

Ef

fect

ive

inno

vatio

n Po

wer

dis

tanc

e 1

Org

stru

ctur

e .5

07

.257

1

.421

2.

935

.080

2 En

viro

nmen

tal u

ncer

tain

ty

2 2.

21

21

Effe

ctiv

e in

nova

tion

1

Org

stru

ctur

e .7

53

.566

3.

82

4.89

8 .0

1

2 En

viro

nmen

tal u

ncer

tain

ty

.324

3 Po

wer

dist

ance

–.

73

4

Inno

vatio

n no

rms

2.72

6


5.3 Data discussion

In H1, p > 0.05, hence the hypothesis that we have proposed should be rejected. Hence, innovation norms are not much positively related to innovation implementation. In the case of H2, we find that innovation norms are successful to influence the relationship between organisational structure, environmental uncertainty and innovation outcomes. The p-value of H2 is highly significant as p = .000.

In case of H3, the moderation of power distance is not significant as p > 0.05. Here, it can be safely inferred that power distance is not influencing to that extent the relationship between successful innovation outcomes and centralisation.

In H4, again we see from the p-value that H4 is asserted as due to the highly significant p = .000. Thus, power distance has some significance as a moderating variable in the relationship between complexity and successful innovation outcomes.

Means standard deviations, standardised coefficient alphas, simple correlations among the variable were all presented in the different tables. Innovation norms is found not to be significantly related to effective innovation out comes. r = .158 and p > .005. The significant positive relation in H2 r = .692 and p = .000 (highly significant) suggests that innovation norms actually influences the relationship between organisational structure, environmental uncertainty and entrepreneurial strategy. Again, in case of H3 r = .011 and p > 005 suggests that power distance may not have any significant moderating aspect in between centralisation and effective innovation outcomes. In case of H4, r = .504 and p = .000 power distance successfully influences the relationship between effective innovation outcomes and complexity.

In case of H5, we see that p = 0.000 thus r = 0.684 while making it highly significant. Thus, H5 is supported. Thus, in case of H5, we find that effective innovation outcome is significantly related to organisational structures and environmental uncertainty.

In case of H6, r = 0.690 and p = 0.000 making it again highly significant. In H6, the mediation of power distance is fruitful as p = .000. Hence, H6 is accepted.

In case of H7, all the variables combined had a significant statistical relation with the prediction of effective innovation outcome. The p-value is 000, hence H7 is accepted.

In case of H8, in case of manufacturing companies, effective innovation outcome is not significantly related to innovation norm. The r-value is .11 which is statistically not significant as p > .05. Hence, H8 is accepted.

In case of H9, in case of manufacturing companies, the mediation of innovation norm in mediating the relationship of effective innovation implementation with organisational structure and environmental uncertainty is significant as p-value is .000. Hence, H9 is accepted.

In case of H10, in manufacturing companies, however the hypothesis is not supported as p-value is more than .05. Hence, H10 is rejected. It is not showing statistical significance in relation to mediation of power distance in relation to centralisation with influencing innovation outcomes.

In case of H11, in manufacturing companies, the hypothesis is supported as p value is less than .05. Hence, H11 is accepted, as power distance is having a significant mediation in the relationship of complexity with innovation outcomes.

In case of H12, we see that in case of manufacturing companies, organisational structure and environmental uncertainty is significantly related to innovation outcomes. The r-value is .798 which is statistically significant as p = .01. Hence, H12 is accepted.

Power distance 699

In case of H13, in manufacturing companies, it is seen that power distance is showing statistically significant mediation between the two independent variables of organisational structure and environmental uncertainty. Hence, H13 is accepted as p = .000.

In case of H14, in manufacturing companies, it is asserted as all the variables entered in the regression equation are showing a significant relationship in predicting about the dependent variable at p = .000. Hence, H14 is accepted.

In case of H15, it can be seen that in non-manufacturing companies the correlation between effective innovation outcome and innovation norms is not statistically significant as p = .159. Hence, H15 is rejected.

In case of H16, the hypothesis is supported. The mediation of innovation norm in mediating the relationship of organisational structure and environmental uncertainty with effective innovation in non-manufacturing companies is statistically not significant as p = .023.

Power distance is not showing a statistical significance in mediating the relationship with both centralisation and complexity to effectuate innovation outcome in both H17 and H18. Hence, H17 and H18 are rejected.

H19 is not accepted as organisational structures and environmental uncertainty is not showing variance of statistical significance with respect to effective innovation in non-manufacturing companies as p = .034.

H20 is also rejected as power distance is not showing any significant statistical mediation between organisational structure, environmental uncertainty with effective innovation outcome in case of non-manufacturing companies.

H21 is supported. The regression coefficient value is .753, and p-value is .001 in the multiple regression equation of effective innovation outcome with innovation norms, organisational structure, power distance and environmental uncertainty.

6 Discussion

The apparent role of innovation related norms and power distance as a prime motivator for the innovation process and innovative ideas may have important implications for research on archetypes of innovative firms (Miller and Friesen, 1984). The current findings suggest that more attention needs to be focused on informal influences that shape and direct entrepreneurial behaviour in organisations. A primal purpose of this work was to gauge the usability of power distance as a moderating variable. McSweeney (2002) identifies a paradigmatic perspective where he argues against Hofstede’s logic and where he rejects Hofstede’s paradigm and premises. This indicates that both the functionalist and other paradigms are needed for future research into national culture and for understanding social behaviour in different national cultures. The same fact was reiterated by Williamson (2002). Hence, implications and further research can always happen and enrich management literature by taking power distance as a moderating variable.

The current findings of this study indicate that a previously unexamined characteristic of the informal organisation power distance is strongly related to effective innovation implementation. Further multiple regression results indicate that power distance and decentralisation are significant independent co relates of effective innovation implementation. The current results also replicate previous findings relating


decentralisation and environmental uncertainty to innovation (Burns and Stalker, 1961; Daft and Becker, 1978; Hage and Aiken, 1970; Tornatzky et al., 1983; Russell and Russell, 1992). However, the results from this research failed to replicate the prior findings of the importance of innovation norms as suggested by Russell and Russell (1992), where the correlation between innovation norm and entrepreneurial strategy had a much higher correlation.

When all other independent variables were regressed against the dependent variable in a multiple regression analysis r square comes to around .55, which serves to justify the inclusion of the variables in the regression equation. What is noteworthy however is the mediating effect of power distance on the influence of organisational structures and environmental uncertainty on effective innovation outcomes. It would appear that in the current sample, innovation related norms and power distance provide both a necessary and sufficient explanation of successful innovation strategies.

These results hold interesting implication for the process underlying the relationship between organisational structure and effective innovation outcomes. Pierce and Delbecq (1977) argued that increased rates of innovation are associated with decentralised structures because managers have more autonomy to initiate and test new ideas. Hage and Aiken (1970), Russell and Russell (1992) and others have argued that increased participation in innovation decisions in decentralised structures leads to increased commitment to the innovation, thereby, permitting more effective implementation. These explanations have intuitive appeal. However, just because individuals are free to be innovative does not mean they will spontaneously burst forth with new ideas and agendas. Similarly, although participation may increase commitment to innovation what generates innovative ideas in the first place? A decentralised structure may facilitate successful innovation outcome. However, the current results suggest that power distance along with other variables in the study contribute the vast majority of variance in explaining successful innovation strategy.

Specifically, a set of innovation related norms as an expression of organisational values and beliefs regarding innovation, may play a gate keeping role, providing innovation and direction to the pursue innovation activities (Russell and Russell, 1992). In this work though not much variance was predicted by innovation norms yet its mediation on the relation between organisational structure, environmental uncertainty on effective innovation implementation was significant. Thus, the work of Russell and Russell (1992) was further reiterated in our work.

As noted earlier innovation is an unstructured process. Individuals may have difficulty evaluating their innovation related activity in terms of its effect on desired short term outcomes or by its conformity with established procedures. However, individuals can evaluate their activities in terms of consistency with organisational norms and values. Although innovational norms may not solve any specific technical problem associated with an innovation, they may guide organisational members into appropriate organisationally sanctioned behaviours that are believed to be an effective means of carrying out innovation.

6.1 On manufacturing and non-manufacturing companies

An important postulate which appeared from this study was the observation that most of the hypothetical relationships were proved correct in case of manufacturing industries.

Power distance 701

Without getting in to the sub-dimensions of the manufacturing aspect it can said or inferred.

1 the construct or the variables of this study to predict innovation has proved to be correct as evident from the results of this work

2 sample size for determining the research relations in manufacturing companies were also optimal

3 the questionnaires used for ascertaining different variables worked in the case of manufacturing companies.

In manufacturing companies also both power distance and innovation norms has a significant mediation on effective innovation outcomes. That was what we had predicted. However, like in the generic case where data from both (manufacturing and non-manufacturing) manufacturing companies also did not show a significant positive correlation between innovation norms and effective innovation outcome.

In case of non-manufacturing companies however the above results as expected did not come out. Apart from the reason of the sample size being very small only 26 companies, the other reason can be that – determining and ascertaining any variable in non-manufacturing context can require a very different model, a different approach. In the case of operations management, also, procurement in manufacturing and service is a very different proposition and often needs different models and questionnaires. However, in this work in non-manufacturing companies also we see that our model of predicting innovation with the help of different independent variables has proved to be right as r square comes somewhere close to .566 explaining as much about 56% of the variance which is quite good in social science context. Thus, it can be safely ascertained that though results in non-manufacturing were less than satisfactory yet the model or the variables on the regression equation to predict about successful innovation outcomes proved to right which was one of the main research objectives of this work.

7 Conclusions

7.1 Specific contribution of this work

Although the correlation between environmental uncertainty, organisational structures with successful innovation outcomes is significant yet it cannot be determined from the simple correlation whether the association is due to

a increased innovation as a result of richer opportunities in dynamic complex environments

b increased rates of innovation causing perceptions of greater uncertainty among respondents.

These findings also suggest that the association between environmental uncertainty, organisational structures and effective innovation outcomes is significantly mediated by power distance. Thus, it can inferred that organisational culture which when mediated by


innovative values and beliefs of the employees acting in unison with innovation related norms is definitely serving a facilitator role. It can be inferred that less innovative firms may tend to screen out or fail to perceive potential innovation opportunities presented by challenging complex environments, thereby perceiving those environments as relatively certain. In contrast innovative firms are characterised by norms, optimal power distance and values that support risk taking along with an external search for new opportunities. Hence, respondents in this firms may perceive their environments as richer source for innovation and more uncertain than their counterparts in less innovative firms.

The apparent role of innovation related norms and organisational culture as a prime motivator for the innovation process and innovative ideas may have important implications for research on archetypes of innovative firms (Miles and Snow, 1978; Miller and Friesen, 1984). Much of this research has emphasised the role of environmental and formal structural and cultural decision making variables in defining a prototypical innovative firm. The current findings suggest that more attention needs to be focused on informal influences that shape and direct the innovative activities of the organisations.

7.2 Future research direction

Future research needs to examine the generalisibility of the current findings and examine the process by which power distance and innovation norms act on innovation. Further more research should also be focussed on how innovation norms in an organisation develop over the time. The response rate in the current effort is just adequate enough to ensure statistical significance yet it is premature to draw implications for practise. However, the results do provide initial support for explanation of successful innovation outcome in the form of significant mediation by power distance and innovation norm. This leads to a host of interesting research questions. Specifically, how do efforts at instilling innovation related norms at top levels of the organisation affect line managers and professionalised who are expected to act more innovative? Do managers at different levels or in different units of the organisation have different perspectives of what is appropriate innovative behaviour? What processes not included in the scope of this study serve to coordinate innovative activities? For example do some managerial styles or leadership practices enhance or inhibit entrepreneurial behaviours (Bass, 1985).

Thus, models of organisational structure, innovation implementation demonstrating relationship between decentralisation, environmental uncertainty, etc., offers little to the practicing manager until such questions are answered.

7.3 Limitations

1 As the study is multidisciplinary in nature, in the course of the study some variables and their sub-dimensions came into light which were not considered before, but can be of utmost importance (for example economic parameters) since those variables do not fall under the scope of the study, it was not possible to delve much in to that.

2 This research is more or less of a generic nature; therefore industry specific variables for instance relating specifically to say jute or tea industry were not considered.

Power distance 703

Acknowledgements

The authors are grateful to the referees and the editorial office for helping to submit the revised paper in the present form.

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Power Distance a deterrent or facilitator for innovation

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