THE ROLE OF EMPLOYEE INCENTIVES AND MOTIVATION ON ORGANISATIONAL INNOVATIVENESS IN DIFFERENT ORGANISATIONAL CULTURES

Paavo Ritala, Mika Vanhala and Katja Järveläinen

Chapter 3 in Managing Knowledge, Absorptive Capacity and Innovation, 2021, pp 61-92 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Organisational innovativeness is known to be affected by employee incentives and motivation, but the evidence is inconclusive regarding the organisational contexts and contingencies where this phenomenon takes place. To examine this issue, we adopt the Competing Value Framework of four types of organisational cultures, and hypothesise differences in the incentives–motivation–innovativeness relationships. Using an empirical study of 425 Finnish firms in technology industries, we found in general that intangible and tangible incentives facilitate both intrinsic and extrinsic motivation, but only intrinsic motivation leads to improved organisational innovativeness. Testing our model for subsamples that included clan, adhocracy, market, and hierarchy cultures, we found that results vary considerably between those. First, incentives have different implications to motivation under different organizational cultures. Further, intrinsic motivation leads to innovativeness under adhocracy, clan, and market culture, but not under hierarchy culture, and extrinsic motivation does not lead to innovativeness under any culture.

Keywords: Innovation; Knowledge Management; Absorptive Capacity; Open Innovation; Organizational Innovation; Organizational Culture; Interpersonal Justice; Innovative Behaviours; Innovation Strategies (search for similar items in EconPapers)
JEL-codes: O31 O36 (search for similar items in EconPapers)
Date: 2021
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