TMT processes as antecedents of management innovation: The moderating role of absorptive capacity

Abstract

Management innovation refers to the introduction of managerial practices, products, and processes that are new to the firm. Despite numerous accounts showing its potential to lead to competitive advantage, the understanding of how and under what conditions firms introduce management innovations is still surprisingly limited. This study proposes that processes that influence the learning capacity of TMTs play an important role in stimulating management innovation. More specifically, we propose that TMT reflexivity and TMT minority dissent enhance management innovation as they provide a continuous check of the appropriateness of management practices for achieving firm goals. Furthermore, we argue that these managerial learning processes are more effective in enhancing management innovation in firms with a high level of absorptive capacity. Empirical testing on a cross-industry sample of Dutch firms provides support for the proposed relationships.