Decentralization, proactive innovation, and mediators: a comparative analysis of cross-level perceptional differences

Abstract

This paper establishes how management can strengthen the proactive innovation of business units as well as how frontline employees can react to local environments through the identification of the strategic actions by local firms. We examine the environment-strategy-performance paradigm through a comparative analysis of a vertical and horizontal structure perspective tested by structural equation modelling, yielding a sample of 252 groups of 382 dual informants interrelated as local managers and frontline employees from local insurance service firms. The findings indicate that perceived market uncertainty is influential in decentralizing management and in the proactive innovation of frontline employees. Consistent with management perception, employees consider resource commitment from hubs and environmental scanning to be effective practices to facilitate proactive innovation. Frontline employees do not strongly consider tolerance in task conflict as a means to achieve proactive innovation, whereas their managers regard it as a method to encourage the free expression of ideas. We use a comparative analysis to disclose the implied perceptional differences in multilevel interactions for promoting organizational proactive innovation instead of the monotonous method to test and interpret a theoretical model.