Firm innovation and upper echelon's impact: a contingency view
31 August 2018
University of Antwerp, Hof Van Liere, Willem Elsschotzaal - Prinsstraat 13 - 2000 Antwerp (route: UAntwerpen, Stadscampus
Prof. dr. Rudy Martens, Prof. dr. Paulina Junni
PhD defence Bhaskar Prasad - Faculty of Applied Economis
Innovation is critical for firms to succeed, survive and achieve sustained competitive advantage. However, pursuing innovation is fraught with risks and uncertainties, making it a daunting undertaking. Thus, a large body of research has evolved around explaining what makes firms likely to pursue innovation. Applying the upper echelons perspective, this thesis aims to deepen the understanding of the role of senior executives in firm innovation. In the extant literature, the firm upper echelons have typically been examined at two levels: at the individual level (CEO) and the group level (TMT). Despite significant developments in applying the upper echelons theory to understand the pursuit of firm innovation, several gaps remain concerning both the role of the CEO and of the TMT. Concerning the former, our understanding about the role of intrinsic, psychological CEO characteristics and behaviour has been under-examined. Regarding the latter, our understanding about the role of TMT information processing is limited. Furthermore, a better understanding of how contextual factors influence the role of the CEO and the TMT in firm innovation is needed. This thesis addresses these research gaps in four essays. Concerning CEO psychological characteristics, the first essay indicates that CEO organizational identification and CEO risk propensity play an important role in firm innovation. Furthermore, these CEO characteristics exert a stronger influence on firm innovation in smaller organizations. Concerning CEO behaviour, the third essay shows that both CEO transformational and transactional leadership contribute to firm innovation. However, environmental dynamism moderates the effect of CEO leadership behaviour, rendering CEO transformational leadership more effective and CEO transactional leadership less effective in dynamic environments. Regarding the TMT, the second essay shows that while TMT affective conflict is negatively related to firm innovation, TMT cognitive conflict can have a positive influence on it up to a certain threshold. Furthermore, environmental uncertainty accentuates the effects of both TMT affective conflict and TMT cognitive conflict. In turn, the fourth essay indicates positive relationships between external and internal TMT advice seeking and firm innovation. However, the impact of TMT external advice seeking on innovation was stronger in competitive environments. Taken together, this thesis offers three key contributions to the upper echelons and innovation literature. First, it adds to our understanding about the role of CEO psychological characteristics (organizational identification, risk propensity) and CEO behaviour (leadership behaviour) on firm innovation. Second, the thesis sheds light on how TMT information processing (conflict and advice seeking) influences firm innovation. Third, by examining the role of contextual factors (internal and external to the firm), this thesis provides a more fine-grained understanding of the role of senior executives in firm innovation.