Abstract
This study investigates the influence of top managers’ individual innovation behavior on firm-level innovation activities, specifically on exploration and exploitation. The influence of individual actions depends on managerial discretion, which is dependent on the ownership context of a business. Thus, this study explores how family ownership moderates the relationships between a top manager’s individual innovation behavior and firm-level exploration and exploitation. Based on a sample of 195 firms, of which 120 are family firms, our findings depict highly significant relationships between managers’ individual innovation behavior and firm-level exploration and exploitation innovation. Furthermore, we find differences regarding these relationships between family firms and their non-family counterparts. We contribute to literature showing that family firms provide a unique context for leveraging a top manager’s individual innovation behavior into firm-level exploration activities.
Highlights
Innovation, the bedrock of business “survival and growth” (Zahra and Covin 1994, p. 183), is an important phenomenon investigated at multiple levels and in several disciplines (Baregheh et al 2009; Damanpour and Schneider 2006)
How are individual behavioral characteristics of top managers related to company level innovation activities? Second, do managerial behaviors have a stronger impact on exploration and exploitation orientation in family compared to non-family firms? By doing so, this paper extends research by showing how individual managerial innovation behavior impacts company level exploration and exploitation behavior in family firms as compared to non-family firms
This study shows that individual innovation behavior of top managers positively shapes firm level exploration/exploitation activities and confirms the importance of executives’ behavior for achieving firm-level outcomes (Alexiev et al 2010; Damanpour and Schneider 2006; de Visser and Faems 2015)
Summary
Innovation, the bedrock of business “survival and growth” (Zahra and Covin 1994, p. 183), is an important phenomenon investigated at multiple levels (individual, team and organizational) and in several disciplines (Baregheh et al 2009; Damanpour and Schneider 2006). Organizational characteristics are important determinants of the level of managerial discretion [the breath of options at a manager’s disposal during strategic decision making (Finkelstein and Boyd 1998)] which is decisive for the extent to which managerial behavior can be translated into to company level outcomes (Crossland and Hambrick 2011; Finkelstein and Boyd 1998; Hambrick and Finkelstein 1987) In this respect, previous research provides evidence that ownership structures are determinants of innovation outcomes at the company level. Our study extends the research exploring the effect of executives’ behavior on firm-level outcomes (Kraiczy et al 2015; Ling et al 2008) pertinent to multilevel analysis of innovation. We point out limitations and suggest opportunities for future research
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