The Role Internal Stakeholders Play in Innovation in Large Corporations

Abstract

Despite the vast existing literature on innovation, the investigation of work conditions that support the generation of ideas to feed the innovative process remains elusive. Holding the assumption that the entire organization is responsible for innovation, not only a specific department or set of experts, I aim to investigate the role two internal stakeholders play in innovation – employees and CEO. I empirically examine the relationship between voice climate – or the workforce perception about its participation in current discussions with ideas, suggestions, and thoughts - and explorative and exploitative innovation. Further, I consider the impact of CEO attributes (origin – insider versus outsider and duality) on developing a climate that promotes employee voice. Using secondary data from firms listed in the Fortune 500 publication, I expect to contribute to (1) innovation literature identifying the impact of voice climate on the firm’s breakthrough and incremental knowledge base, (2) to upper echelons and agency theories by assessing to what extent CEO characteristics (origin and duality) impacts exploitative and explorative innovation through voice climate, and (3) to organizational voice studies by assessing the influence of voice climate on organizational outcomes. This study finds support for the relationship between voice climate and exploitative innovation. Thus, as voice climate increases, employees will be willing to express their ideas, suggestions, and thoughts regarding work-related issues, which leads to incremental innovation. The results also show that CEOs are important actors in building (or destroying) voice climates.