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Companies operating in dynamic and rapidly changing markets need to design an organisational structure that fosters innovation. However, there are still remaining gaps in literature regarding the impact of organisational structure on the development of an environment that stimulates creativity and innovation. This paper analyses the influence of different dimensions of organisational structure on the development of a work environment for innovation. A case study with a mixed method approach was conducted in the Brazilian subsidiary of a multinational company recognised worldwide for its innovative capacity. The results contribute to the theory by showing that several structural dimensions-mainly the level of communication, level of formalisation and job codification-affect the work environment for innovation. The study also enriches the comprehension on how managers should design specific structural dimensions to stimulate creativity and innovation.
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132
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nt. J. Entrepreneurship and Innovation Managemen
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, Vol. 24, Nos. 2/3, 2020
Copyright © 2020 Inderscience Enterprises Ltd.
How does the organisational structure influence a
work environment for innovation?
Eliana Gaspary* and Gilnei Luiz de Moura
Federal University of Santa Maria,
Av. Roraima, 1000, Cidade Universitária,
Santa Maria, 97105-900, Brazil
Email: elianagaspary@yahoo.com.br
Email: mr.gmoura.ufsm@gmail.com
*Corresponding author
Douglas Wegner
Unisinos University,
Av. Dr. Nilo Peçanha, 1600,
Bairro Boa Vista, Porto Alegre, 91330-002, Brazil
Email: dwegner@unisinos.br
Abstract: Companies operating in dynamic and rapidly changing markets need
to design an organisational structure that fosters innovation. However, there are
still remaining gaps in literature regarding the impact of organisational
structure on the development of an environment that stimulates creativity and
innovation. This paper analyses the influence of different dimensions of
organisational structure on the development of a work environment for
innovation. A case study with a mixed method approach was conducted in the
Brazilian subsidiary of a multinational company recognised worldwide for its
innovative capacity. The results contribute to the theory by showing that
several structural dimensions – mainly the level of communication, level of
formalisation and job codification affect the work environment for
innovation. The study also enriches the comprehension on how managers
should design specific structural dimensions to stimulate creativity and
innovation.
Keywords: innovation management; work environment for innovation;
climate for innovation; creativity; organisational structure; matrix organisation;
human resources; entrepreneurship; multinational companies; research and
development.
Reference to this paper should be made as follows: Gaspary, E.,
de Moura, G.L. and Wegner, D. (2020) ‘How does the organisational structure
influence a work environment for innovation?’, Int. J. Entrepreneurship and
Innovation Management, Vol. 24, Nos. 2/3, pp.132–153.
Biographical notes: Eliana Gaspary holds a Masters in Business
Administration from the Federal University of Santa Maria in Brazil. Currently,
she is a Project Manager at Sebrae, the Brazilian Service of Assistance to Micro
and Small Enterprises. Her research interests include strategic management,
human resources, innovation management, work environment for innovation
and climate for innovation.
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Gilnei Luiz de Moura is a Professor and researcher at the Federal University of
Santa Maria in Brazil. His research interests include strategic management,
innovation and entrepreneurship, organisational structure, business process
management, and relational approaches in dynamic capabilities. He is also
leader of Mutare, a research group in organisational change, innovation and
organisational behaviour.
Douglas Wegner is a Professor and researcher at the Business and Management
School of the Unisinos University. His research interests include
inter-organisational relations, collaborative networks, multi-partner alliances,
network governance and network orchestration. He is a member of GeRedes, a
Brazilian group for inter-organisational network studies.
1 Introduction
Contemporary organisations operating in highly competitive markets must be able to
continuously reorganise themselves in order to respond rapidly to a challenging business
environment (Choi and Price, 2005; Král and Králová, 2016). To operate within complex
markets, organisations require flexibility and innovative strategies to maintain
competitiveness (Schreyögg and Sydow, 2010). Among other factors, organisational
structure may boost or hinder a company’s capacity to innovate (Dekoulou and Trivellas,
2017). Static and hierarchical organisational structures may not provide the necessary
flexibility to sustain organisational competitiveness (Jensen et al., 2007). A key challenge
is to create an organisational design that promotes and encourages employee’s innovative
behaviour (Tidd et al., 2005). When organisations promote an environment favouring
innovation, employees are more likely to interact with each other to create new
knowledge, develop their capacities (Teece et al., 2016) and find optimal solutions to
business problems (Hoegl et al., 2003; Joseph et al., 2016).
Organisational theory has emphasised that organisational structures are increasingly
being configured to patterns oriented towards innovation (Blumentritt and Danis, 2006;
Milosevic and Srivannaboon, 2006; Rhee et al., 2017). Organisations are becoming more
attentive to organisational climate issues and internal environment that supports
knowledge creation and innovation (Ren and Zhang, 2015; Naranjo-Valencia et al., 2016;
Valaei et al., 2017). The literature is prominent in studies that analyse organisational
structure (Burns and Stalker, 1961; Lawrence and Lorsch, 1967; Hage and Aiken, 1967;
Mintzberg, 1983; Olson et al., 1995; Grant, 1996; Lee and Grover, 2000) and the
organisational environment behind innovation (Amabile et al., 1996; Tesluk, 1997;
Ahmed, 1998; Hunter et al., 2007). However, there is a lack of research that relates these
two dimensions to understand how the organisational structure may influence the
development of an environment that promotes innovation. Therefore, the aim of this
paper is twofold: to describe the organisational structure and the work environment of an
innovative company; and to analyse how key dimensions of the organisational structure
(formalisation, centralisation and integration) influence the development of a work
environment for innovation.
To reach such aim a case study was carried out with a mixed-method approach at
3M’s Brazilian subsidiary, a worldwide renowned organisation for its capacity to
generate innovation. Interviews with eight managers and a survey with 39 employees
134 E. Gaspary et al.
from R&D department were taken. A primary theoretical contribution of the study is to
stress the relationships between two important organisational dimensions widely
addressed in isolation by the literature. Such analysis represents a major contribution as it
shows that organisational structure works as precedent of work environment for
innovation. We also make relevant managerial contributions by showing how managers
may design the organisational structure to foster a work environment for innovation.
2 Literature review
2.1 Organisational structure
Over the past decades organisations have changed the ways in which they are structured
and managed. The classical theory of organisational structure, influenced by scholars like
Weber (1947) and Chandler (1962) was concerned with universal principles of
organisational design. Organisational theorists and practitioners wanted to find a better
way of organising (Taylor, 1911) or most effectively match employees to the right jobs
(Fayol, 1949). However, the goal of finding the most efficient and productive methods
(Taylor, 1911) was contested by the contingency theory in the 1960s and 1970s,
contending that there is no single best approach, but organisational design should be
adapted to specific contextual demands. Many organisational scholars defend the idea of
organic flow (Ciborra, 1996; Garud et al., 2002; Siggelkow and Rivkin, 2005; Kenis
et al., 2009), which calls for necessary shifts in organisational structure from hierarchies
to networks, from specialised departments and units to temporary project groups, and
from vertical lines to lateral communication.
Traditional organisational designs may not respond to the demand for agility and
flexibility in rapidly changing contexts. They do not promote cooperation and knowledge
sharing between workers, which are essential elements for innovation development
(Jensen et al., 2007; Salerno, 2009; Raisch et al., 2009; Asif, 2017). The organisational
structures capable of promoting innovation are those which stimulate learning,
knowledge-sharing, problem-solving groups and job rotation (Aleksić and Jelavić, 2017;
Colombo et al., 2017; Benzer et al., 2017). Organisations operating in highly turbulent
environments seek flexibility through the use of smooth work flows in place of rigid
structures (Dunford et al., 2007). These new organisational structures and their associated
management practices represent an enormous change away from hierarchical control,
centralised bureaucracy and formalisation (Galunic and Eisenhardt, 2001). The traditional
organisational design amounts to inflexibility and limited ability to adapt, especially in
complex and fast changing environments (Child and McGrath, 2001).
Certain characteristics of organisational structure have been recognised as critical
elements influencing productivity, innovation (Germain, 1996), and work relationships
(Hunter, 2002). Organisational structure is generally characterised according to the
dimensions of formalisation, centralisation and integration (Galbraith, 1977).
Formalisation refers to the degree to which an organisation applies rules and procedures
to appoint behaviour (Hage and Aiken, 1967; Lee and Grover, 2000, Lin and Germain,
2003; Olson et al., 2005). Centralisation describes the degree of concentration of the
decision-making process, evaluation of activities, and worker autonomy (Hage and
Aiken, 1967; Van de Ven and Ferry, 1980; Lee and Grover, 2000; Olson et al., 2005).
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Integration refers to which activities from different workers and departments can be
coordinated by formal mechanisms (Germain, 1996; Lee and Grover, 2000).
Previous studies analysed how the structural characteristics of organisations influence
innovation (Arad et al., 1997; Garud et al., 2002; Siggelkow and Rivkin, 2005; Kenis
et al., 2009). Attributes such as flexibility, freedom and the opportunity for collaboration
can promote creativity and innovation. By contrast, characteristics such as strictness,
control, predictability, stability and order (generally associated with traditional
hierarchical structures) may actually impede creativity and innovation (Arad et al., 1997).
Hage and Aiken (1967) and Kanter (1983) found that higher degrees of standardisation
and formalisation are negatively related to innovation. Centralisation has also been
identified as a characteristic that negatively affects innovation (Hage and Aiken, 1967).
On the contrary, higher levels of autonomy facilitate the generation of ideas in the
innovation process (Kanter, 1988; Amabile, 1988). Work groups are also highlighted as
innovation facilitators. When such groups are based on high levels of autonomy,
numerous sources of information and many opportunities for communication, they
benefit from multiple perspectives and shared knowledge. This combination of
characteristics provides a work group with the diversity to foster creativity and
innovation (Kanter, 1988).
2.2 Work environment for innovation
Work environment has been considered as a relevant factor to stimulate innovative
capacity (Ekvall, 1987, 1996; Isaksen and Ekvall, 2010; Dul and Ceylan, 2014). It
consists of an intervenient variable affecting the organisational processes which in turn
influence the productivity and well-being of employees (Kuenzi and Schminke, 2009).
Because work environment affects the process of communication, problem-solving,
decision-making, learning and employee motivation (Ekvall, 1996), it is an important
variable to consider in understanding organisational performance and change (Schneider
et al., 1996; Koene et al., 2002). Even when individuals are technically able to innovate,
their willingness to do so depends on the organisational environment. This set of
conditions refers to the organisational climate that fosters innovation (Shanker et al.,
2012; Naranjo-Valencia et al., 2016).
The work environment for innovation can be assessed according to the degree of
support and motivation an organisation offers to employees allowing them to explore
innovative approaches (Martins and Terblanche, 2003). The internal environment is
constituted by behaviours, attitudes and feelings that characterise life within the
organisation (Ekvall, 1996), and can have a positive effect on creativity and innovation
(Amabile et al., 1996). An environment promoting innovation can be identified by those
practices and rules which encourage flexibility, the expression of ideas, and learning,
which consequently motivate co-workers to take initiative, to explore and develop new
projects, processes and products (Mumford, 2000).
The existence of an environment fostering innovation also facilitates the role of
leaders in improving individual performance (West et al., 2003; Liu and Chan, 2017;
Stańczyk, 2017). For innovation to occur, employees’ attention must be directed towards
the creation of new products, processes and services crucial to the firms survival
(Van de Ven, 1986; Lambert, 2015). A great environment of innovation may stimulate
workers’ attention and create a collective mind favourable to innovation. Many studies
136 E. Gaspary et al.
(Amabile et al., 1996; Ekvall, 1996; Gundry et al., 2016; Wojtczuk-Turek and Turek,
2016) have shown that organisational environment is strongly related to creativity and an
organisation’s capacity for innovation.
Amabile et al. (1996) developed a model comprised of eight dimensions influencing
creativity and innovation in the work environment: organisational encouragement,
supervisory encouragement, work group support, freedom/autonomy, sufficient
resources, challenging work, workload pressure and organisational impediments to
creativity. Other researchers have emphasised similar variables for the creation of an
environment that fosters innovation. West and Farr (1989) mention autonomy, resources,
work group cohesion, clear feedback, participatory leaders, organisational support for
innovation and challenging duties as factors facilitating innovation.
The model developed by Amabile et al. (1996) can be used to evaluate the work
environment and its influence on innovation activities. This model originated from the
componential theory of creativity (Amabile, 1983) and the componential theory of
creativity and organisational innovation (Amabile, 1988). These approaches consider the
individual’s creativity as integrated within the work environment and thus, affected by
the conditions and specific activities he/she is engaged in Chowhan (2016). Dul and
Ceylan (2014, p.1254), for instance, report thatfirms with creativity-supporting work
environments introduce more new products to the market and have more new products
success in terms of new product sales.”
Despite the existence of these two strands of research that separately link
organisational structure (Garud et al., 2002; Siggelkow and Rivkin, 2005; Kenis et al.,
2009) and work environment (Amabile, 1983, 1988; Tushman and Anderson, 2004) to
innovation performance, there are no studies that analyse how the former impacts the
later. It is surprising since managers may modify the organisational structure to foster a
work environment that favours workers’ creativity and innovation.
3 Method
The research was developed through a single case study. Important aspects of an effective
case study are the identification of one or more cases relevant to the research issue, and
clarification of the specific approach used (Flick, 2014). Considering our objectives, the
main criteria for the case selection was that the company in question must be recognised
as an innovative company. Thus, the Brazilian subsidiary of 3M was chosen, based on its
ranking as most innovative company in Brazil in the years 2012 and 2013 according to
business magazines. 3M was founded in 1902 in Minnesota (USA) and started its
international expansion in the 1940s. The corporation arrived in Brazil in 1946 and
opened its first manufacturing unit in the city of Campinas, in the State of São Paulo. 3M
is a company with diversified technology that works on the creation and development of
products and technological solutions. The company operates globally in 46 technological
platforms divided in five different areas: industrial, health, security and graphics, energy
and electronics and consumption. In Brazil, 3M runs a R&D lab comprised of 55
professionals dedicated to the development of new technologies and the application of
such technologies to new products.
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3.1 Qualitative approach: in depth interviews
To describe the organisational structure characteristics and the work environment for
innovation, a qualitative research based on secondary data and in-depth interviews with
eight managers was carried out. They occupy strategic positions in the company’s
business units and in the R&D department. These managers work on average for 19 years
at the company and were chosen due to their knowledge on the company’s structure and
work environment. The research protocol was divided in two sections, based on the
theory regarding organisational structure and innovation environment. The first section
referred to the characteristics of the company’s organisational structure and its
dimensions, including the following categories: structure model, formalisation,
centralisation, and integration (Hage and Aiken, 1967; Nahm et al., 2003). The second
section referred to the organisations’ innovation environment, including the following
categories: organisational encouragement, supervisory encouragement, teamwork
support, freedom, sufficient resources, challenging work, organisational challenges and
pressure on the workplace (Amabile et al., 1996).
An interview with the company’s product manager in Latin America served as a
pre-test. This validation aimed to ensure the questions were understood by the
interviewees and necessary adjustments made, resulting in the elimination of one
question. After this preliminary phase, eight interviews with technical and business
managers who worked in the different business units as well as the R&D labs at 3M in
Brazil were done. These managers were nominated by the company to participate due to
their vast experience and knowledge of the company’s characteristics. The interviews
were performed in the company’s headquarters, with an average duration of 60 minutes
each. Secondary data was also collected on the company’s website as well as its
sustainability report, and were utilised in the characterisation of the company and its
innovation practices. The analysis of the interviews was performed through content
analysis, following the categories previously described.
3.2 Quantitative approach: survey
To reach the second objective of the study, a survey with 39 employees of the company’s
corporative lab responsible for the development of new products and technologies was
conducted. The questionnaire was drafted to identify the organisational structure and its
environment for innovation. Organisational structure was measured by 27 items
developed by Hage and Aiken (1967) and Nahm et al., (2003). Such items are divided
into seven dimensions: centralisation decision making (4 items e.g., “Employees in
this organisation are not encouraged to involve in decision making”), centralisation
hierarchy of authority (4 items – e.g., “Even small matters have to be referred to someone
higher up for a final answer”), formalisation – job codification (5 items e.g.,How
things are done here is let up to the person doing the work”), formalisation – rule
observation (2 items e.g.,The employees are constantly being checked on for rule
violations”), integration – hierarchical levels (4 items – e.g., “There are few layers in our
organisational hierarchy”), integration – horizontal integration (3 items e.g.,Our
workers are assigned to work in cross-functional teams”) and integration
communication (5 items e.g., “Communications are easily carried out among
workers”). The seven dimensions of the organisational structure were measured using a
138 E. Gaspary et al.
five-point scale (totally disagree to totally agree) by which the respondents expressed
perceptions concerning the organisational characteristics.
Work environment was measured based on the items developed by Amabile et al.
(1996), through 30 questions, divided into eight dimensions: Organisational
encouragement (4 items – e.g., “In this organisation, there is a lively and active flow of
ideas”), supervisory encouragement (4 items – e.g., “My supervisor serves as a good
work model”), team support, (4 items – e.g., “In my team, people are willing to help each
other”), freedom/autonomy (3 items – e.g., “I have the freedom to decide how I am going
to carry out my projects”), sufficient resources (4 items e.g., “The facilities I need for
my work are readily available to me”), challenging work (4 items – e.g., “The tasks in my
work are challenging”), organisational impediments (3 items – e.g., “There are unrealistic
expectations of what people can achieve in this organisation”), work pressure (4 items
e.g., “People are too critical for new ideas in this organisation”). The eight dimensions of
the work environment were measured through a four-point scale, by which the
respondent evaluated his work environment according to the frequency at which certain
specific situations happen day-to-day, from (1) never up to (4) always.
Additional questions were included for respondent characterisation such as age group,
company position, formal educational level, time in the company and time in the position.
Before performing the survey, we validated the questionnaire with a senior employee
from the corporative laboratory. Once this step was accomplished, the questionnaire was
printed and distributed to the 55 employees who work in the company’s corporate
laboratory. These employees were chosen because their activities are strongly related to
research and development of new products. After four weeks, 39 questionnaires
(representing 70.9% of the population) were returned by mail to the researchers. The data
analysis was performed in three steps. We started with a descriptive analysis to explore
our data, followed by a confirmatory factorial analysis. After the factorial analysis,
regression tests were performed to evaluate the influence of the organisational structure
on the innovation environment.
4 Results
The results section is organised into two subsections. We firstly describe 3M’s
experience in formatting an innovative work environment. Later we present the results of
the survey that analyses how the organisational structure influences the company’s work
environment.
4.1 The experience of 3M in formatting an innovative workplace
We initially present the results of the eight interviews with the R&D managers,
highlighting their perceptions regarding the organisational structure and the
organisation’s innovation environment.
4.1.1 Organisational structure dimensions
3M’s Brazilian subsidiary adopted a matrix organisational structure, following its global
guidelines. There are five business groups divided in 38 business units segmented by its
corresponding market. In the past, the company was focused on products, but it realised
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that it should become more market-oriented, structuring itself by market segments such
as mining, metallurgy, consumption, among others. The R&D department has two levels
of laboratories: the divisional ones, which develop products, and the corporative
laboratory, which develops technologies. Its organisational structure is oriented toward
innovation through its matrix structure that connects the five business groups with the
functional departments (R&D, human resources, accounting, and marketing).
In regard to its centralisation level, the company is characterised by its low authority
hierarchy. Team autonomy is encouraged, with high employee participation in the
decision-making and strategic planning processes. One of the managers highlights that
“the team has total autonomy, there is always a consensus, and usually such consensus
involves people from different areas laboratory, manufacturing, sales” (Manager 2).
According to another manager, “we know that the more barriers you put in it, the more
the process slows down and affects the client. So, the company provides a good level of
autonomy whenever possible” (Manager 5).
Table 1 Synthesis of the results of the qualitative research regarding organisational structure
Categories Company’s characteristics Description
Organisational
structure
Matrix structure The employees report to a project manager
and a functional manager. The integration
and communication among people occur in
a cross-cutting way and require greater
collaboration.
Centralisation Decentralised People have autonomy; participate in the
decision-making and strategic planning
processes.
Formalisation Intermediate level of work
patterns
There are norms, rules and schedules to be
followed. However, people have freedom to
do their jobs.
Integration High level of integration The multifunctional teams, collaboration
among teams, technological platforms and
open communication flow promote the
integration of people, teams and
departments.
The company is also characterised by its intermediate level of formalisation and work
standards. People have autonomy to decide how they will perform their daily activities,
as long as company’s guidelines, norms and external legislations are complied. There is a
consensus among the interviewees that “when we talk about innovation, we will not be
able to have it if the person simply follows a manual” (Manager 7). Another aspect which
must be highlighted is that innovation is not only in the products sold. The company also
looks at innovation in processes, in customer service, how to give a seminar and sell
products. “We strongly stimulate the employee to do differently. He knows that he has
the managements support to do this, and he knows that he is encouraged to do so”
(Manager 5). The favourable environment for innovation avoids the excess of
formalisation and bureaucracy, stimulating team members’ entrepreneurship. “It is
impossible for you to have an innovating environment if you do not have a sense of
entrepreneurship, and you need autonomy for that” (Manager 4). The limit for people’s
freedom is the ethical dimension: “If it is not the right way of doing business, you will
not do this, this is one of the limits” (Manager 1).
140 E. Gaspary et al.
The company also has a high level of horizontal integration, a high level of
communication and few hierarchical levels in the R&D department. There is a great
diversity of people, products and experiences. This tends to generate reciprocity among
teams, facilitating problem resolution and the creation of new ideas. Another
characteristic that supports horizontal integration is the team leaders, which act as
facilitators and offer support to their teams. “The leader is trained not to act deeply on
what the person is doing, and offer support if he/she has an issue to do so instead”
(Manager 2). According to Manager 5, “our standard is to let people work. It is a
‘managed autonomy’. If you let loose too much, things may not happen, and if you look
into detail, you lose creativity” (Manager 5). Table 1 presents a synthesis of the
categories analysed and the company’s characteristics.
4.1.2 Dimensions of the work environment
The company develops a series of organisational encouragement actions to foster
creativity and innovation. The organisation’s structure “stimulates the creative person,
since the company is a ‘technology supermarket’. The creative potential is highly
encouraged” (Manager 1). One of the main actions that the company performs to foster
creativity and innovation is the Tech Forum, an event promoted by lab employees with
the goal of sharing knowledge and exchange information. Another company’s policy
consists of authorising employees to devote 15% of their working hours for innovation,
either in developing a new project or in searching for new knowledge. The Invention
Submission consists of a practice in which people register their ideas and use such
platform to organise and put their projects into practice. As stated by Manager 5, “the
most important aspect is to have an environment in which nobody feels embarrassed, and
everybody is encouraged to give ideas, nobody is censored” (Manager 5).
The role of supervisory encouragement to stimulate intra-entrepreneurship and
innovation was highlighted by the interviewees. “The leader has this entrepreneurial
mindset of making things happen” (Manager 1). Another important leadership
characteristic is being available and act as facilitators. “The leader must motivate the
team, and people must feel that the leader is on their side” (Manager 3). Manager 8 also
highlights the role of supervisory encouragement, when she affirms that “I try to stay
very close, being part of the process, I don’t simply let them go, but in what I can help, I
try to adapt myself and show other ways for us to see” (Manager 8).
As for team support, the interviewees were questioned regarding the level of
knowledge diversity in teams and openness to new ideas. The managers highlighted that
the teams possess a high level of knowledge diversity, “but with a strategic focus”
(Manager 1). The internal environment also stimulates the openness to new ideas. People
are encouraged to participate in different teams and projects. “We bring people from
outside at any moment that a team needs a specialist. Sometimes people come to
participate in my team for some time because in that moment I need some specific
experience” (Manager 5). The company is concerned with creating an environment with
significant team support to the activities developed there.
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Table 2 Synthesis of the results of the qualitative research of the internal environment for
innovation
Categories of analysis Company’s characteristics Management practices
Organisational
encouragement
Incentives to give ideas, innovation
in all the departments, recognition,
awards and innovation culture.
Tech Forum, Lab Day, 15%
policy, Invention Submission,
Idea action, metrics of new
product introduction
Supervisory
encouragement
Constructive leadership that engages
people and operate as facilitator and
motivator.
To prepare technical leaders
who stimulate and support
people to be innovative.
Team support Diversity of knowledge, stimulus
and openness to new ideas,
interaction and collaboration among
teams, balanced teams (with young
and experienced team members).
Job rotation, partnerships in
projects, sharing and global
support by researchers.
Freedom Incentive and freedom to bring up
ideas, discipline to deliver results,
prioritisation of the most viable
projects, intra-entrepreneurship.
Genesis Grant (financial
support program for projects),
15% policy.
Resources Internal information available,
information sharing, strong network,
access to financial resources via
business cases.
Contact tools to find co-
workers within the company
that may support specific
projects; Business case.
Challenging work Strong work challenges, disruptive
innovation projects, new learning.
Stimulus by leadership to
break paradigms, content
challenge (perform in an
innovating manner)
Organisational
impediments
Limits to project scopes, delay in the
processes, leadership deeply
involved in administrative matters,
bureaucracy, time waste on handling
everyday problems.
Reduce bureaucracy and
reports, reserve time to think
on future projects.
Work pressure Beneficial pressure for results,
challenging spirit, pressure with the
purpose of overcoming changes in
the market (more demands and
higher speed)
Balance professional and
personal life; reduce
unproductive activities
(meetings, chats) that do not
add value to the innovation
goals.
Entrepreneurship (new
category)
People feeling as business owners,
development of own ideas,
autonomy.
15% policy, the creator of the
idea is the project leader,
offer autonomy to employees,
performance assessment
based on entrepreneurial
attitude.
Innovation culture
(new category)
Organisational culture oriented to
innovation (developed throughout
the decades), freedom, organisational
and leadership support, innovating
environment.
Stimulate cooperation among
people and teams, reinforce a
culture of innovation, and
instil innovation in the
company DNA.
142 E. Gaspary et al.
In regard to freedom and people’s autonomy to decide in which projects they will
participate and how they will be executed, there are two aspects. The 15% policy
encourages team members to do something ‘out of the radar’. The choice of projects is
realised based on potential and viability. The company also has a mechanism for financial
support for the 15% projects called Genesis grant. The goal of these actions is to
“stimulate the entrepreneurial spirit. The creator of the idea is also the project leader, in
which 3M allows the person to tackle inside the company” (Manager 2). However,
besides the new projects, the company has a defined pipeline, with a calendar that must
be followed. Incentive to encourage new ideas exists, however, “there is also a high level
of execution discipline, because we are here to deliver results” (Manager 1).
When questioned about the easiness to access the resources required to perform, the
managers indicated that the company’s internal records are easy to access and available
to people. “We have easy access to technical information, market studies; there is a world
that we can explore here” (Manager 1). Access to financial resources depends on the
viability of the proposal and the best projects receive internal grants. According to one of
the managers, “the best projects receive [financial support]. It works as an investment
bank; the best business cases receive the resources” (Manager 4).
Another dimension of the innovation environment refers to challenging work.
Professionals are constantly challenged, mainly in relation to projects’ deadline and the
expected degree of innovation “The researcher that is in a disruptive project gets
extremely motivated, because he feels that he is in the edge of knowledge” (Manager 3).
It is up to the leaders to challenge people and foster innovation. “Our leaders are focused
on innovation and on challenging the status quo. This is the ideal environment. (…)
Leadership molds the environment, people look up to leadership, and they set the tone. If
you have a well-engaged leader and he really stimulates the process, the rest flows
easily” (Manager 5).
Regarding organisational impediments which may jeopardise the creativity and
innovation process, the managers highlighted that “the number of technological platforms
is an important scope, but it creates an obstacle. The researcher must be inside a
technological platform. This is a good thing for the company. But is it an obstacle? Yes,
it is” (Manager 2). It was also mentioned that the matrix structure, in some cases, ends up
generating a delay in the processes and leaders become more involved in administrative
matters. Propensity to risk was highlighted as an aspect which could be amplified. “I
judge that there may be a possibility that we could become more innovating, being able to
amplify a certain propensity to risk by managers, but a calibrated one” (Manager 4).
As for work pressure, the managers evaluated that “the pressure for results is
inevitable, but if you have a good management of processes (…) this relieves the
pressure” (Manager 1). Another interviewee considers pressure as “something salutary.
People know that this is the company’s spirit (…) We know that we are in this level
(Manager 2). A concern the company has is how to manage time in order not to
overwhelm people with work so that professionals are able to maintain a balance between
personal and professional life. The manager highlights the importance of time
management, in which people must be attentive to non-aggregated value things, such as
unproductive meetings. “These are challenges that we must look at, because the pressure
is not going to get any better, only make things worse” (Manager 5).
Empirical evidence revealed two new categories of analysis related to the internal
innovation environment: entrepreneurship and innovation culture. The company is able to
create a favourable environment for entrepreneurship, as highlighted by one of the
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managers: “the company’s organisational structure creates an environment which
emulates a series of smaller companies working (…) You have people feeling as if they
were business owners, able to make decisions, which in other types of companies would
be linked to higher hierarchical levels” (Manager 4). Other testimonies reinforced this
category of analysis: “Each person is a source of innovation, and a way to stimulate the
intra-entrepreneurship is basically through these actions and this entrepreneurial spirit,
where the creator of the idea is also the project leader, in which the person may endeavor
inside the company” (Manager 2).
Throughout the interviews the category innovation culture also emerged. Interviewees
highlighted that “the company has an immense patrimony, which is this innovation
culture that strengthens collaboration among people” (Manager 1). “The company’s
culture is what makes this happen (…) the innovation culture is part of the company’s
DNA, from the CEO to the other hierarchical levels (Manager 8). Still regarding
innovation culture, a manager reinforces that despite being considered innovating and
winning awards, “the company established mechanisms and is always highlighting the
innovation culture, it never ends. There are things we can still improve, but today I think
that there are several mechanisms and we can keep this light on” (Manager 5).
Table 2 presents the synthesis of the results of the qualitative phase regarding the
innovation environment.
4.2 Quantitative phase
The survey was responded by 39 managers of 3M Brazil’s R&D lab. On average, these
managers have worked at the company for nine and a half years. The average time of the
respondents in the same function is a little above five years. As for their education, 71.8%
hold a graduate degree, 17.9% a bachelor’s degree and 2.6% a high school diploma.
These data are coherent with the functions performed in the company, in which high
specialisation is required: 51.3% are laboratory specialists, 17.9% are researchers, 15.4%
are chemists and 15.4% occupy other positions in the company. A factorial analysis was
performed to confirm the groupings of the 27 observed variables on organisational
structure. This analysis generated a Kaiser-Meyer-Olkin (KMO) measure of 0.268.
Despite the low index, a significant Bartlett test (p < .001) for sphericity confirmed equal
variance across groups, indicating a satisfactory data for the factorial analysis (Field,
2009). The analysis generated seven factors that explain 75.77% of the data variance. The
questions were grouped according to the original dimensions of Hage and Aiken (1967)
and Nahm et al. (2003). Only the seventh factor (formalisation rule observation) was
excluded from the analysis as the Cronbach’s alpha value was not high enough (.506) to
justify the question bundling.
The original dimensions for work environment were developed by Amabile et al.
(1996). A factorial analysis was also performed to verify their adequacy and identify
subjacent factors. The analysis generated a KMO measure of 0.467, with the Bartlett
sphericity test being significant at p < .001. Although the KMO index was also low in
this case, a significant Bartlett test confirmed the results of the factorial analysis to be
satisfactory (Field, 2009). This analysis generated eight factors explaining 81.31% of the
data variance. These eight factors matched the number of factors presented by Amabile
et al., (1996), however, the eighth factor (freedom) yielded in a Cronbach’s alpha (.502)
144 E. Gaspary et al.
that was too low to justify inclusion in further analysis. Mean values for each of the
factors were then calculated and are presented on Table 3.
Table 3 Descriptive statistics
Organisational structure Mean1 Std. dev. Variance
Centralisation – decision-making 2.08 0.91 0.83
Centralisation – authority hierarchy 1.77 0.62 0.39
Formalisation – rule control 2.46 0.73 0.53
Integration – communication 3.61 0.78 0.61
Integration – hierarchical levels 2.59 1.00 1.00
Integration – horizontal integration 4.13 0.61 0.37
Innovation environment Mean2 Std. dev. Variance
Supervisory encouragement 3.17 0.72 0.52
Challenging work 3.09 0.72 0.52
Sufficient resources 2.85 0.55 0.30
Team support 3.18 0.61 0.38
Organisational encouragement 2.82 0.62 0.38
Organisational impediments 1.92 0.54 0.29
Work pressure 2.51 0.60 0.36
Notes: N = 39. 1Five-points-scale. 2Four-points-scale.
The results offer the employees’ first impression about the organisational structure as
well as the company’s innovation environment. In regards to organisational structure, the
integration dimensions had the highest means (5-point-scale): horizontal integration
(M = 4.13), communication (M = 3.61) and hierarchical levels (M = 2.59). These results
reveal that working with multifunctional teams, facilitated communication flow among
people and among hierarchical levels, characterises the company as highly integrated.
Integration allows organisations to have more agility and flexibility, due to an
improvement in communication (Lawrence and Lorsch, 1967). High integration implies
an environment rich in collaboration and communication among people and departments
(Olson et al., 2001). Working in teams and sharing information makes people establish
communicational and coordination channels for experience and knowledge exchange
(Jans and Prasarnphanich, 2003).
The low levels of centralisation – decision-making (M = 2.08) and authority hierarchy
(M = 1.77) demonstrates that people have opportunities and are encouraged to
participate in the decision-making process. Respondents also consider that the authority
hierarchy is low, i.e., autonomy exists, and people do not depend on leadership to make
decisions and solve issues. In complex environments and with constant changes, as in the
case of 3M, decentralisation enables people to make decisions and implement them
rapidly.
The means of the innovation environment dimensions demonstrate that the company
has an internal environment which offers support and foments innovation. The
dimensions with the highest means (four-point scale) were: team support (M = 3.18),
supervisory encouragement (M = 3.17), challenging work (M = 3.09), sufficient
resources (M = 2.85) and organisational encouragement (M = 2.82). Work pressure
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(2.51) and organisational impediments (1.92) were the dimensions with the lowest means,
which may be considered positive, once the strong incidence of these elements may be a
barrier when fostering an innovation environment (Amabile et al., 1996).
When there is team support members feel comfortable and satisfied (Tushman and
Anderson, 2004). Previous studies showed that fostering creativity and the development
of an internal innovation environment may occur through teamwork, because of member
diversity, mutual openness, a constructive challenge of ideas and shared commitment
towards the project (Albrecht and Hall, 1991; Monge et al., 1992). Regarding supervisory
encouragement, several studies pointed out the importance of the leader’s role,
particularly in relation to having clear goals (Bailyn, 1985), open interactions between
supervisor and subordinates (Kimberly and Evanisko, 1981), and support by the team and
its ideas (Delbecq and Mills, 1985).
The third highlighted dimension involves challenging work. A challenging work
environment makes people experiment joy and meaningful work; therefore people will
put in more energy (Ekvall, 1996). Challenging activities encourage people make more
effort to meet daily demands successfully. People will have more creative ideas when
they are intrinsically motivated by the challenge of the work itself (Amabile, 1983, 1988,
1993; Amabile et al., 1996). The other dimensions – sufficient resources (M = 2.85) and
organisational encouragement (M = 2.82) presented relatively high means, thus making it
possible to affirm that they also contribute for the development of an innovation
environment.
4.2.1 Regression analysis
To test the influence of the variables of organisational structure on the work environment
for innovation, seven regression models were performed, as shown in Table 4. For each
model, one of the innovation environment dimensions was inserted as the dependent
variable, with the six dimensions of organisational structure as independent variables.
Four out of seven models were found to be statistically significant: model 1 (supervisory
encouragement); model 2 (challenging work); model 3 (sufficient resources) and model 7
(pressure at work).
In regression model 1, supervisory encouragement is the dependent variable with the
dimensions of organisational structure as independent variables. The model is statistically
significant (F = 5.772; p < .01), with the independent variables explaining 52% of the
variance of the dependent variable. Communication shows a positive influence (0.552;
p < .01), and job codification a negative influence (–0,342; p < .05) on supervisory
encouragement. The other dimensions of organisational structure (decision-making,
hierarchy of authority, hierarchical levels and horizontal integration) do not present
influence on encouragement from leaders.
In the second regression model, only job codification influences (negatively)
challenging work (–.328; p<.10). This result suggests that the higher the level of
formalisation of job codification, the lower the perceived level of challenge at work. The
third regression model indicated a positive influence of communication (0,566; p < .01)
on sufficient resources, explaining 39.5% of the variance of the dependent variable. The
higher communication levels the higher the perception of employees on sufficient
resources available to carry out the work.
146 E. Gaspary et al.
Table 4 Regression analysis
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7
Supervisory
encouragement
Challenging
work
Sufficient
resources
Work group
support
Organisational
encouragement
Organisational
impediments
Workload
pressure
Independent variables Beta t
Beta t
Beta t
Beta t
Beta t
Beta t
Beta t
(Constant) .000 .000 .000 .000 .000 .000 .000
Integration – communication .552 3.949** .066 .387 .5 66 3.607** .353 2.002
.373 2.162* –.287 –1.653 –.428 –2.704*
Centralisation – decision making –.101 –.646 –.188 –.986 .024 .139 –.035 –.176 –.215 –1.119 .133 .687 –.285 –1.616
Centralisation – hierarchy of authority .102 .693 –.112 –.620 –.072 –.436 –.147 .792 –.043 –.237 –.004 –.023 .339 2.035*
Formalisation – job codification –.342 –2.541* –.328 –1.987
–.151 –.999 –.035 –.205 .080 .480 .277 1.653 –.262 –1.714
Integration – hierarchical levels .090 .686 .238 1.476 .025 .169 .004 .025 –.073 –.451 –.109 –.665 .324 2.171*
Integration – horizontal integration –.018 –.139 .015 .092 .030 .203 .141 .852 –.009 –.055 .014 .086 . 128 .863
F 5.772** 2.073
3.489** 1.647 1.959 1.847 3.322* Model
R
2
0.520 0.280 0.395 0.236 0.269 0.118 0.384
Note:
p
< .10, *p < .05, **
p
< .01.
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ow does the organisational structure influence a work environmen
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The second finding to highlight from model 7 is the positive influence of hierarchy of
authority on the perceived pressure at work (0.339; p < .05). This finding suggests that if
the level of work autonomy is limited because there is a strong hierarchy of authority, the
perception of work pressure tends to be stronger. Another significant result is the
negative influence of job codification on pressure at work (–0.262; p < .10). When the
manner of performing a job is arbitrary, workers are not required to develop new ideas
and alternative methods, but are expected to simply follow rules and adopt a more
accommodating behaviour. In this sense, work tends to be less challenging and,
consequently, with lower pressure, reducing the innovative potential. Furthermore,
regression model 7 highlights the positive influence of Hierarchical structure on Pressure
at work (.324; p < .05), suggesting that the number of hierarchical levels making up the
organisational structure relates positively with the degree of pressure perceived by its
workers.
5 Theoretical and managerial implications
The results of our study shed new lights on how the organisational structure may
influence the work environment and foster innovation. The interviews with managers
revealed that an organisational structure with low levels of centralisation and
formalisation, and high levels of integration contributes to create a work environment that
promotes freedom and autonomy. These evidences confirm that organisational structures
oriented toward innovation need to provide organisational flexibility an employees’
autonomy (Kenis et al., 2009; Ajagbe et al., 2016; Dedahanov et al., 2017). However, the
qualitative analyses also showed that such an organisational structure is not enough to
make people innovate. Companies must adopt a series of specific management practices
to promote a work environment for innovation. The managers described a set of practices
that stimulate freedom, make job challenging and offer the resources people need to
perform their jobs so as to generate innovation in an ongoing basis. Therefore, we have
strong evidences that a flexible and decentralised organisational structure must be
combined with management practices that make innovation flourish. As a first theoretical
contribution we show that people will have more chances to be innovative inside an
organisation that combines the right structure and offers a climate for innovation.
The quantitative analyses allowed us to go further regarding the influence of specific
organisational structure dimensions on the work environment for innovation. The
regression models highlighted four organisational dimensions that must be carefully
considered to foster an innovative environment: integration (communication),
formalisation (job codification), centralisation (decision making) and integration
(hierarchical levels). Communication and formalisation are especially important because
they impact several dimensions of the work environment.
A high level of communication positively influences supervisory engagement,
resources available to employees, and negatively influences workload pressure. An open
and direct communication makes people confident about their jobs and avoids
misunderstandings regarding performance expectations (Aiken and Hage, 1971). Thus,
our second theoretical implication consists in showing that integration through open and
frequent communication plays a relevant role in creating a work environment for
148 E. Gaspary et al.
innovation. This result contributes to the research of Amabile (1996), Ekvall (1987,
1996) and Isaksen and Ekvall (2010) about creating an innovating environment.
On the other hand, the regression analyses also showed that a high level of
formalisation (job codification) influences negatively the supervisory engagement,
challenging work, and workload pressure. A work environment with high levels of
formalisation and job codification requires people to devote time to comply with
bureaucracies and reduces opportunities to innovate (Claycomb et al., 2005). Therefore, a
third theoretical contribution consists of demonstrating that despite the importance of
formalisation (Hage and Aiken, 1967; Lee and Grover, 2000, Lin and Germain, 2003;
Olson et al., 2005), it may have negative effects on a work environment that aims to
foster innovation. Finding an adequate level of formalisation becomes fundamental to
assure task execution without undermining the potential of innovation.
Our study also provides managerial implications. It shows that companies seeking to
foster innovation should implement changes in their organisational structures to provide
support for an internal environment of innovation. This means the adoption of a more
organic structure with the following attributes: decentralisation to encourage autonomy
and entrepreneurship; increased informality to allow greater freedom in how people
accomplish their duties; and greater integration to promote higher levels of fluidity in
communication and greater diversity within work groups. The case highlights the
practices adopted by the company to reach this result, by means of policies which
stimulate employees’ entrepreneurship, encourage innovation and ensure leadership
support.
The results strongly suggest that companies may benefit by replacing hierarchical
structures reinforcing stability by more flexible organisational models based on
multifunctional work groups and shared leadership. Such flexible structures make it
possible to adapt faster to changing environments. The case of 3M Brazil shows that an
innovation environment will be nurtured and supported by organisational structures that
encourage communication, the free exchange of ideas and information, partnership and
collaboration among workers. Companies must be attentive to design an organisational
structure that allows creativity, freedom and autonomy, and supports innovative
behaviours.
6 Conclusions
The goal of this paper was:
a To describe the organisational structure and the work environment of an innovative
company.
b To analyse how key dimensions of the organisational structure influence the
development of a work environment for innovation.
Therefore, our research contributes to the literature by testing the relationship between
two important organisational variables organisational structure and work environment
for innovation. To reach these goals we analysed the Brazilian subsidiary of 3M – a
company worldwide known as highly innovative. As a general conclusion, the case
reveals that innovation strongly relies on an organisational design that supports people’s
creativity and freedom to implement new ideas. We reached our first goal by describing
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149
the characteristics that make the company’s work environment prone to foster innovation
and the specific management practices that support employees to innovate on an ongoing
basis.
The quantitative analysis allowed us to reach our second goal and offer theoretical
and practical implications by showing how structural characteristics may influence a
work environment for innovation. The case highlights that managers must consider that
the organisational structure may influence its innovative ability, through an environment
in which people conceive ideas and try new possibilities. Thus, it is important to consider
both results from the interviews and survey to design organisational structure, avoiding it
to act negatively when stimulating innovation. The main limitation of the research refers
to the fact that it is a single case study, not allowing generalisations. We sought to
minimise this limitation through conducting such study in a company recognised for its
innovation and that attempts to develop an internal innovative environment. Future case
studies with companies from different segments may expand the research, as well as
larger surveys to test these relationships in a sample of organisations.
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While radical innovation brings extensive economic rewards to firms, it is an activity fraught with risk. Prior research has shown that such risks mainly stem from organizational arrangements (at the level of individuals, teams, firms, and inter firm collaborations), which are inadequate or inefficient to support radical innovation. The papers in this special issue on “Organizing for Radical Innovation: Exploring Novel Insights” take stock of past work and provide novel insights about how to organize for radical innovation. The overarching idea linking them is that radical innovation hinges on the creation of fundamentally new knowledge and the continuous stimulation of creativity. Thus, organizational arrangements that support such processes play a crucial role in explaining and predicting the successful commercialization of breakthrough ideas, radically new technologies, and solutions. In particular, the field of science, which in essence aims for the systematic production of new knowledge, can be a valid source of inspiration for how individuals, teams, firms, and interfirm collaborations should organize for radical innovation. Moving from these premises, in this introductory paper, we offer an overview of the topic of organizing for radical innovation and highlight possible linkages with the organizing principles. Then, we summarize the main insights from the papers in this special issue and use their core ideas to sketch a novel research agenda for scholars working at the intersection of organization theory, economics of science, and management of innovation.
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Innovation can create value for an organization and its stakeholders. In developing an innovation blueprint in complex contexts, such as construction, previous studies have alleged that transformational leadership is an important determinant of innovation. This study aims to investigate the role of innovation climate and learning transfer climate on the relationships between leadership and innovation in the construction sector. A questionnaire survey was conducted with 158 returns from 500 respondents (client developers, construction consultants, and contractors in China). The findings reveal that (1) support for innovation (innovation climate factor) moderates the effects of intellectual stimulation, individualized consideration (transformational leadership factor), and contingent rewards (transactional leadership factor) on innovation, and (2) performance self-efficacy (learning transfer climate factor) moderates the effects of intellectual stimulation (transformational leadership factor) and contingent rewards (transactional leadership factor) on innovation. This study reveals the intertwining relationships between leadership, climates, and innovation and lays a platform for further longitudinal, qualitative studies. Managerial implications are discussed; different leadership and management climates need to be strategically adopted and nurtured in dynamic organizational environments.