Collaborative innovation in the Pakistan’s dairy industry: effectiveness of managerial leadership and organizational readiness

Abstract

Buyer-supplier relationships have become increasingly important for generating innovation in the food industry. Despite extensive literature in this area of research, the most specific question of managerial leadership fostering innovation collaboratively has received considerably less attention.This could be one reason why collaborative innovation remains largely elusive for managers. Scholars have urged the theoretical development and empirical validation in this area of inquiry.The study empirically relates two important areas of strategic management research: the managerial leadership and the organizational readiness to innovate collaboratively. More specifically, the study examined the impact of transformational and transactional leadership behaviors (as measured by MLQ) on organizational readiness capabilities such as adaptability, information exchange, organizational learning culture and contracting to determine how managers influence and prepare their organizations for innovation through buyer-supplier relationships in the context of agribusiness such as Pakistan’s dairy industry. Two theoretical lenses namely full range leadership and dynamic capabilities view were used to review the literature for proposing the conceptual model for the study. The conceptual model was tested through Partial Least Squares Structural Equation Modelling (known as path modelling). The path model was employed by using a Likert-scaled questionnaire through 372 cross sectional valid surveys. Face-to-face method was utilized to collect data for empirical testing of relationship, if any, exists between managerial leadership behaviors and organizational readiness capabilities thereby fostering collaborative innovation performance. Further, twenty nine key informant interviews were recorded to discuss the path modelling results of the study. The structural model showed a good fit with the quantitative data through reliability and validity. The analysis provided the strong support for all (fifteen) hypotheses. Both transformational and transactional behaviours were found to have positive impact on organizational readiness capabilities for generating innovation through buyer-supplier relationships. The passive/avoidant behaviours were also tested and found significantly negative for generating collaborative innovation performance thereby eliminated for the advance modelling. The study findings revealed managers should utilize both transformational and transactional leadership behaviours to prepare their organizations for the purpose of innovation through buyer-supplier relationships in the enterprise model of Pakistan’s dairy industry. Further, the study identified adaptability, information exchange, organizational learning culture and contracting as the underlying mechanisms through which leadership influences collaborative innovation performance. In the PLS-SEM study results, transactional behaviours exhibited greater significance in comparison with the transformational behaviours. While, transformational behaviours after dropping some of its relational dimensions also became significant but with lower path estimates. This reinforced that both types of developmental behaviours are important and their utilization is largely determined by managers’ understanding about when to use these behaviours. As such transformational behaviours do not replace discipline, exchange and reinforcement behaviours thereby complementing transactional leadership. The quantitative phase of the study also highlighted three clusters to which respondents can be meaningfully grouped on the basis of their reported leadership behaviours. These clusters were named as: 1) transformation enthusiasts, 2) transaction catalysts, and 3) change aversive. As such, the influencing variable, managerial leadership behaviours measured by MLQ was collated with organizational readiness capabilities to explore the behaviours perceived by managers to become ready for change (i.e. collaborative innovation). The cluster analysis results also showed the significant impact of demographic variables specifically age and education for preparing organization to swiftly adapt to changes happening in the market. This part modestly contributed to the debate: ‘leadership can be nurtured’. Based on the scientific results, the study made two significant contributions in the context of food industry in developing countries specifically Pakistan’s dairy industry. First, it illuminated the importance of both transformational and transactional leadership but with a greater focus on transactional behaviours to prepare organizations for collaborative innovation. Second, the study provided empirical support for the underlying mechanisms including adaptability, information exchange, organizational learning culture and contracting through which leadership behaviours affects the readiness of agribusiness organizations to innovate collaboratively. Another contribution to literature comes through result anomalies which have been found in the study in comparison with the previous studies on managerial leadership and innovation. Such anomalies appreciate that transactional leadership is relatively more important in the context of the food industry in a developing country. In other words, managers should not stick to only transformational behaviours when they endeavour to traverse challenges such as collaborative innovation. Possible explanation of the anomalies was justified. In sum, the study offered a modest contribution to understand the relationship between managerial leadership and collaborative innovation performance by suggesting that readiness capabilities play a crucial mediating role to prepare the organizations for innovation through buyer-supplier relationships in the context of agribusiness specifically Pakistan’s dairy industry. Further, the study identified both transactional and transformational leadership behaviours are effective in generating innovation collaboratively. The study is quite useful for business managers, dairy industry in Pakistan (with a particular focus on Punjab), and academia interested in the theoretical progress of collaborative innovation. Given the study limitations, future empirical research was recommended based on the findings to advance and validate the model developed for the study.