Abstract
Purpose – One of the challenges in the business world is maximising effectiveness and firm performance. This study proposes that the right blend of people (with openness to change and self-transcendence values) and process (effectuation) would result in innovative behaviour and firm performance.Theoretical framework – The effectuation process has been found to be useful in promoting innovativeness, especially among small firms whose resources are scarce. This relationship is also true in large firms, although these have more resources and operate in a relatively stable environment.Design/methodology/approach – Using a snowball sampling approach, a total of 206 completed questionnaires were collected online from employees involved in decision making and innovative work processes in multinational companies in Selangor, Malaysia. PLS-SEM was used to analyse the data.Findings – The right people (who are open to change or self-transcendent) blended with the right process (effectuation) were found to positively predict innovative behaviour and firm performance. Effectuation and innovative behaviour also mediated the relationships between individual values and firm performance, suggesting that people and process should coexist to enhance firm performance.Research Practical & Social implications – Effectuation is scarcely practised in large firms. Therefore, we suggest that large firms encourage the use of effectuation through training. As the practice is better received among individuals who are open to change and self-transcendent, these values could also be used as hiring criteria.Originality/value – This study contributes to the literature by analysing the roles of people and process in optimising firm performance, and identifying effectuation and innovative behaviour as mechanisms that link individual values to firm performance.
Highlights
Today’s business environment is undergoing an aggressive transformation and relentless changes in the name of evolution
The following question remains: “What are the roles of people and process in advancing firm performance?” This is of concern due to Malaysia’s stagnant ranking in the Global Innovation Index (GII)
The study aimed to answer the following research questions: a) What are the roles of people and process in advancing firm performance?
Summary
Today’s business environment is undergoing an aggressive transformation and relentless changes in the name of evolution. These dynamic business conditions lead to uncertainty caused by a lack of knowledge about possible future states of affairs (Knight, 1921). Given the complexity and ambiguity of the business world, one of the most challenging conundrums lies in maximising effectiveness and firm performance. This is apparent among multinational companies (MNCs), especially those in the Malaysian manufacturing sector. The current business conditions have sparked conflicting viewpoints and arguments that priority should be given to either people or processes in the highly uncertain environment
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