The Use and Effectiveness of Management Innovation

The objective of this thesis is to examine the antecedents and outcomes of the use of management innovation. Specifically, this thesis examines the contingency factors influencing the use of management innovation, including the role of employees (employee empowerment, organisational identification and employee organisational commitment) and institutional pressures (coercive, mimetic and normative). Further, the thesis examines the outcomes of management innovation by examining the impact of the use of management innovation on organisational performance and competitive advantage. In addition, this thesis examines the mediating role of organisational dynamic capabilities (strategic flexibility and research and development (R&D) competence) in the association between management innovation and organisational performance. Data were collected using mail and online surveys distributed to middle-level managers in Australian organisations across different industries and was analysed using structural equation modelling. The thesis follows the “Thesis by publication” format to present three academic papers. The aim of Paper One is to investigate the role of employees in driving the use of management innovation. Specifically, Paper One examines the influence of employee empowerment on the use of management innovation and the mediating role of organisational identification and employee organisational commitment in the relationship between employee empowerment and management innovation. The findings extend the management innovation literature and the contingency-based literature by providing an empirical insight into the influence of contingency factors on the use of management innovation. Specifically, the results reveal that employee empowerment is positively associated with both the practice and techniques xvi dimensions of management innovation. In addition, the findings indicate that organisational identification partially mediates the relationship between employee empowerment and management innovation techniques, while employee organisational commitment (involvement) partially mediates the association between employee empowerment and management innovation practices. The findings of this paper contribute to the management innovation literature and contingency-based literature examining the antecedents of management innovation by providing an empirical insight into the vital role of employee empowerment, organisational identification and employee organisational commitment in driving the use of management innovation. Paper Two is grounded on DiMaggio and Powell’s perspective of institutional theory, examining the influence of institutional pressures (coercive, mimetic and normative) on the use of management innovation and the impact of management innovation on competitive advantage. The findings extend the management innovation literature and the contingency based literature by examining the role of institutional pressures as contingency factors influencing the use of management innovation. Furthermore, the findings add to the body of literature examining the effectiveness of management innovation and extend the strategic management research by providing empirical evidence on the role of management innovation as a source of competitive advantage. The results reveal that the extent of use of management innovation is influenced by internal coercive and normative pressures. Specifically, internal coercive pressures in the form of directions from senior management, board of directors and the office head, as well as directions regarding the initiation of a new vision or mission and the implementation of new strategic plans, increase the extent of use of management innovation. Moreover, normative pressures exerted through compliance with standards and the recommendations of professional bodies regarding financial reporting or corporate governance mechanisms, are found to increase the extent of use of management innovation in organisations. Further, the results indicate that the extent of use of management innovation practices and techniques has a positive influence on competitive advantage. The empirical findings of this paper extend the literature examining the factors influencing management innovation by highlighting the effect of institutional pressures on the use of management innovation. Furthermore, the findings contribute to the strategic management literature and the literature focusing on the effectiveness of management innovation by providing empirical evidence of the impact of management innovation on competitive advantage. The purpose of Paper Three is to examine the effectiveness of management innovation by examining the mediating role of two organisational dynamic capabilities, strategic flexibility and R&D competence, in the association between management innovation and organisational performance. The findings contribute to the literature examining the effectiveness of management innovation by highlighting the impact of management innovation on organisational performance. Further, the findings contribute to the strategic management literature by providing an empirical insight into the mediating role of strategic flexibility and R&D competence in the association between management innovation and organisational performance. The results indicate that management practices and management techniques exert a positive influence on strategic flexibility and R&D competence. Furthermore, strategic flexibility is positively related to both financial and non-financial performance, while R&D competence is positively related to non-financial performance. Hence, strategic flexibility is found to mediate the association between management innovation (practices and techniques) with organisational performance (financial and non-financial), and R&D competence is found to mediate the association between management innovation (practices and techniques) with non-financial performance. These empirical findings contribute to the management innovation literature examining the effectiveness of management innovation, and the strategic management literature emphasising the importance of organisational dynamic capabilities in enhancing organisational performance.