EXPLORING THE PRODUCT INNOVATION OUTCOMES OF CORPORATE CULTURE AND EXECUTIVE LEADERSHIP

Abstract

Corporate culture and top executives’ leadership behaviour both may drive firm innovativeness. However, resource constraints often force firms to specify one source to spread an innovation orientation. Innovation-oriented corporate culture reflects the values, norms, and artifacts shared by a large set of organisational members; conventional wisdom implies that it fosters innovativeness. In contrast, top executives’ leadership behaviour drives innovations from the top; its influence on product innovation outcomes remains uncertain. This study examines the relative impact of innovation-oriented corporate culture and top executives’ transformational leadership on new product frequency. In so doing, it complements the commonly applied resource-based perspective with an upper echelons perspective, emphasizing top executives as the most important predictors of the firm’s strategic actions. Relying on dyadic data from 136 top executives and 414 subordinates, the results show that an innovation-oriented corporate culture is more effective in enhancing the frequency of new product introductions than top executives’ transformational leadership.