4.

Cultivating Innovation Through Human Resources

4.1. Corporate Culture

Corporate culture and climate are indispensable for nurturing innovation and
entrepreneurship within existing organizations. (1)
All organizations have cultures or sets of values that influence the way members
behave in a variety of areas, including innovation.(2)
Culture, whether the context is organizational or national, refers to patterns of
fundamental assumptions rooted in values, and contextual artifacts that are shared by a
group of people.(3)
Culture is reflected in shared patterns of beliefs, values, and expectations that
produce norms that powerfully shape behaviors exhibited, thought processes, and feelings
held by groups or individuals.(4)
A common and frequently used definition in management research originates from
SCHEIN who defines organizational culture as a pattern of shared basic assumptions that the
group learned as it solved its problems of external adaptation and internal integration, that
has worked well enough to be considered valid and, therefore, to be taught to new members
as the correct way to perceive, think, and feel in relation to those problems.301 These shared
values and beliefs help individuals understand organizational functioning and thus provide
them norms for behavior in the organization.302

Corporate culture plays a critical role in fostering innovation and entrepreneurship in

organizations. (27)
An organizational culture of innovation provides an organization the necessary
ingredients to innovate.(28) It is therefore necessary to understand the relationship between
innovation and organizational culture in order to nurture innovation.
A culture of innovation is not limited to a culture that proliferates new products or
processes or services. In an organizational context, an innovation culture or innovation
subculture is receptive to and encourages new ideas, change, and risk, and promotes
autonomy among employees.(30)

Highly innovation-supportive cultures are linked to new product development, which

is an objective index of an organizations innovative capability by encouraging teamwork, risk
taking, and creativity that are important for new product development. (31)

Numerours researchers in the field have identified various organizational factors that
are conducive to innovation and entrepreneurship. Some of the recurring organizational
culture values for creating innovation and corporate entrepreneurship include:
. autonomy with special emphasis on employee empowerment(44)
. risk taking, including a high tolerance for failure(45)
. proactiveness(46)
. competitive aggressiveness(47)
 . cultural emphasis on achievement(48)
. an open learning culture that encourages constructive dissent49
. creativity 50
. emphasis on teamwork values 51

The reinforcers that enable the conveying of these cultural values to employees include:
. Managerial support for and top management involvement in
entrepreneurship
and innovation activities52
. Reward systems, with explicit goal setting, feedback, and rewards based on
results53
. Explicit resource commitment (e.g., time, monetary resources) for innovation
and entrepreneurship54
. Decentralized decision making structures with minimal formalization and
bureaucracy55
. Participative leadership styles that offer maximum autonomy to employees,
which in turn leads to employee empowerment56
. Challenging work assignments and team structures for task assignments
whenever possible57

An effective culture of innovation and entrepreneurship where in the employees

perceive an organizational climate for entrepreneurship and innovation is expected to bring
about the following entrepreneurial behaviors that are commonly associated with
entrepreneurship among employees.82
. Opportunity seeking and grasping
. Taking initiative to make things happen
. Solving problems creatively
. Managing autonomously
. Taking responsibility and ownership of things
. Seeing things through
. Networking effectively to manage interdependence
. Putting things together creatively
. Using judgment to take calculated risks

For encouraging such behaviors among the workforce, managers of organizations

might find it useful to hire employees with entrepreneurial skills and attitudes such as project
management skills, high locus of control, etc.83 Some of the other traits that are usually
associated with innovators are that they are creative, have broad interests, are highly
motivated, are resourceful, and, most importantly, solve problems.

Human resource managers for organizations must find people with the right kind of
skills and train them on the essential competencies required for being entrepreneurial. As
Gibbs notes, the essential competencies can be pulled by the environment.84

Therefore, culture can nurture entrepreneurial tendencies of employees as well as

drive the organization to recruit individuals who fit into the organizations entrepreneurial
culture, thereby leading to maintenance of the shared values of the organization for
innovation and entrepreneurship. Moreover, because one of the core values of
entrepreneurial organizations is a learning orientation, the values of the organization might
change over a period of time due to the learning process. Accordingly, entrepreneurial
organizations must select employees who not only match with the current culture but who
also are capable of adapting themselves to the future organizational culture.85

1. Donald Kuratko et al., Implement Entrepreneurial Thinking in

Organizations,Advanced Management Journal 58, no. 1 (1993): 2839.
2. Eric Flamholtz, Corporate Culture and the Bottom Line, European Management
Journal 19, no. 3 (1993): 268275.
3. Edgar Schein, Organizational Culture, American Psychologist 45 (1990): 109
119.
4. Geert Hofstede, Cultures Consequences: Comparing Values, Behaviors,
Institutions, and Organizations across Nations (Thousand Oaks, CA: Sage, 2001)
27. Lemon and Sahota, Organizational Culture as a Knowledge Repository for
Increased Innovative Capacity, Technovation vol. 24, no. 6 (2004): 483498.
28. Pervaiz Ahmed, Culture and Climate for Innovation, European Journal of
Innovation Management 1, no. 1 (1998): 3043.
29. Lemon and Sahota, op. cit.
30. Charles OReilly, Corporations, Culture and Commitment: Motivation and Social
Control in Organizations, California Management Review 31, no. 4 (1989): 925.
31. Avan Jassawalla and Hemant Sashittal, Cultures That Support Product-Innovation
Process, Academy of Management Executive 16, 3 (2002): 4254.

44. Ahmed, op. cit. Also see G. T. Lumpkin and Gregory Dess, Clarifying the
Entrepreneurial Orientation Construct and Linking it to Performance, Academy of
Management Journal 21, no. 1 (1996): 135172.
45. See Pavlov Dimitratos and E. Plakoyiannaki, Theoretical Foundations of an
International Entrepreneurial Culture, Journal of International Entrepreneurship 1, 2
(2003): 187215. Also see Jeffrey Hornsby et al., An Interactive Model of the
Corporate
Entrepreneurship Process, Entrepreneurship Theory and Practice 17, (1992): 2937.
46. Lumpkin and Dess, op. cit. Also see John Stopfod and Charles Baden-Fuller,
Creating
Corporate Entrepreneurship, Strategic Management Journal 15, no. 7 (1994): 521
536.
47. Kristina Jaskyte and William Dressier, Organizational Culture and Innovation
 in Nonprofit Human Service Organizations, Administration in Social Work 29, no. 2
(2005): 2342. Also see Lumpkin and Dess, op. cit.
48. Steve Kozlowski and Brian Hultz, An Exploration of Climates for Technical
Updating and Performance, Personnel Psychology 40 (1987): 539563.
49. Annika Hall, Leif Melin, and Mattias Nordqvist, Entrepreneurship as Radical
Change in the Family Business: Exploring the Role of Cultural Patterns, Family
Business
Review 14, no. 3 (2001): 193208. Also see Dimitratos and Plakoyiannki, op. cit.
50. Rosabeth Kanter, The Change Masters (New York: Simon and Schuster, 1983).
51. See Ahmed, op. cit. and John Stopford and Charles Baden-Fuller, Creating
Corporate Entrepreneurship, Strategic Management Journal 15, no. 7 (1994): 521
536.
52. See Gaylon Chandler, Chalon Keller, and Douglas Lyon, Unraveling the
Determinants and Consequences of an Innovation-Supportive Organizational
Culture,
Entrepreneurship Theory and Practice 25 (2000): 5976. Also see Ulrike de Brentani
and
Elko Kleinschmidt, Corporate Culture and Commitment: Impact on Performance of
International New Product Development Programs, Journal of Product Innovation
Management
21, (2004): 309333.
53. See Jeffrey Hornsby, Donald Kuratko, and Ray Montagno Perception of Internal
Factors for Corporate Entrepreneurship: A Comparison of Canadian and U.S.
Managers,
Entrepreneurship, Theory & Practice 24 (1999): 924. Also see Kuratko et al., op. cit.
54. Hornsby et al., op.cit., De Brentani and Kleinschmidt, op. cit.
55. Fariborz Damanpour, Organizational Innovations: A Meta-Analysis of Effect of
Determinants and Moderators, Academy of Management Journal 34, no. 3 (1991):
555590.
56. Emmanuel Ogbonna and Lloyd Harris, Leadership Style, Organizational Culture
and Performance: Empirical Evidence from UK Companies, International Journal
of Human Resource Management 11, no. 4 (2000): 766788.
57. See Kanter, op. cit., Kozlowski and Hultz, op. cit.
58. Ahmed, op. cit.

82. Gibbs 2000, op. cit. Also see Kelly Shaver and Linda Scott, Person, Process,
Choice: The Psychology of New Venture Creation, Entrepreneurship: Theory &
Practice
16, no. 2 (1991): 2345.
85. Robert Heneman, Judith Tansky, and Michael Camp, Human Resource
Management
Practices in Small and Medium-Sized Enterprises: Unanswered Questions and
Future Research Perspectives, Entrepreneurship: Theory & Practice 25, no. 1 (2000):
1126.

301 Schein (1997), p. 12.

302 Deshpand and Webster (1989), p. 4.
303 See Schein (1997), pp. 16 ff.; Homburg and Pflesser (2000b), p. 450
311 See Ulijn and Weggeman (2001), p. 492.