Innovation is not enough: climates for initiative and psychological safety, process innovations, and firm performance

TLDR

Process innovations require complementary climates to support their adoption and implementation. The study introduces and examines organizational climates of initiative and psychological safety as contingencies for process innovations. The authors analyze 47 mid‑sized German firms to assess how process innovations, initiative climate, and psychological safety relate to performance. Climates of initiative and psychological safety positively correlate with improved return on assets and goal achievement, and they moderate the impact of process innovations on performance. © 2003 John Wiley & Sons, Ltd.

Abstract

Abstract This paper contributes to the discussion on contingencies of process innovations by focusing on and introducing organizational‐level constructs of climate for initiative and psychological safety. We argue that process innovations, defined as deliberate and new organizational attempts to change production and service processes, need to be accompanied by climates that complement the adoption and implementation of such innovations. Our study of 47 mid‐sized German companies examines the relation between process innovations, climates for initiative and psychological safety, and firm performance. Results show that climates for initiative and psychological safety were positively related to two measures of firm performance—longitudinal change in return on assets (holding prior return on assets constant) and firm goal achievement—and moderated the relation between process innovations and firm performance. Copyright © 2003 John Wiley & Sons, Ltd.