Organizational Culture and Individual Innovativeness among Employees Working in an MNC

Abstract

This study aims to explore the relationship between different organizational culture types (Adhocracy, Clan, Hierarchy, and Market) based on the Competing Values framework and individual innovativeness of employees working in an MNC. The data was collected from 150 participants who were employed in MNC. The questionnaires used in the study were OCAI scale (Cameron & Quinn, 2006) and Individual Innovativeness Scale (Hurt et al., 1977). Results revealed that Adhocracy, Clan, and Hierarchy were not significantly correlated with individual innovativeness. However, a significant correlation was found between Market culture and Individual Innovativeness. Furthermore, using simple linear regression it was found that market-oriented organizational culture influence individual innovativeness among employees. These findings provide insights into the potential of market culture to stimulate innovativeness among employees.

Introduction

I. INTRODUCTION

In today's competitive and ever-changing global marketplace, where multinational corporations (MNCs) face increasingly diverse markets and intense competition, innovation is crucial for their success and survival. Innovativeness is one of the most crucial factors for economic survival and sustainability for almost any type of business (Boyles, 2022). In order to be an innovative institution, it is important to have a culture that inspire, build and nurture innovative minds. Therefore, setting up the right culture is crucial for every organization.

However, nurturing a workforce that embraces innovation requires a deliberate focus on organizational culture, the shared values, beliefs, and behaviours that shape how employees interact and work within the organization (Schein, 2010). A supportive culture can empower employees to take risks, experiment with new ideas, and collaborate effectively, ultimately leading to increased innovation (Scott & Bruce, 1994). Conversely, a rigid or bureaucratic culture can stifle creativity, discourage risk-taking, and hinder innovation efforts (Amabile, 1999).

Multinational companies are eager to find human resources capable of producing new winning ideas. They are proposing massive investments to fuel the pipeline of innovation (Kurian, 2015). However, only a few organisations create novel products. This study examines the relationship between organizational culture and innovativeness among IT employees in multinational corporations (MNCs).

The four organisational culture types namely Adhocracy culture, Clan culture, Hierarchy culture and Market culture in the study is based on the Competing Values Culture Model (Quinn & Rohrbaugh, 1983).

According to OCAI Online (2019), the four organizational culture types are characterised as the following.

Adhocracy culture is characterized by a workplace which is dynamic and creative. Leaders are viewed as risk-takers and innovators. Growing and producing new resources are the long-term objectives. Adhocracy culture embodies a corporate ethos characterized by decentralized leadership, individual autonomy, and flexible decision-making processes. It prioritizes continual adaptation, empowering frontline employees to take ownership of their tasks and address challenges according to their judgment and expertise.

Clan culture is characterized by a friendly work environment. The leaders are seen as role models, sometimes even as father figures. Loyalty and tradition keep the company together. There are many shared interests and involvement among employees. The foundation for defining success includes meeting the demands of the clients and caring for people. The company values team work, involvement, and agreement.

Hierarchy culture is characterized by formalized and structured workplace The organisation is kept together by formal guidelines and policies. Stability and outcomes, along with effective and seamless task performance, are the long-term objectives.

Success is defined by dependable delivery, ongoing planning, and reasonable costs. Work and predictability must be guaranteed through personnel management.

Market culture is characterized by results-driven workplace were achieving goals, deadlines, and getting things done are prioritised. People are goal-oriented and competitive. Hard workers, producers, and competitors are leaders. They have high expectations and can be demanding. The most crucial factors are achievement and reputation. The long-term focus is on competing activities and achieving objectives. Success is defined by market dominance, accomplishing goals, and having excellent metrics. Data and analysis play a crucial role in informing decision-making processes and employee motivation is fuelled by incentives and rewards.

Individual innovativeness, as defined by Hurt et al. (1977), is conceptualized as a normally distributed underlying personality construct, characterized by a propensity for change. This construct represents an individual's inherent willingness to embrace and adapt to novel ideas, technologies, and innovations. Rooted in the fundamental attributes of personality, innovativeness reflects a disposition towards exploration, experimentation, and openness to change. Agarwal and Prasad (1998) further elaborate on this concept, emphasizing the individual's proactive engagement with new technologies and innovations. This inclination towards change signifies not only a willingness but also a readiness to explore uncharted territories and to challenge the status quo. Such a mindset is pivotal in navigating the complexities of modern-day environments, where innovation serves as a cornerstone for progress and competitive advantage. Thus, by embracing and embodying the traits of innovativeness, individuals contribute not only to their personal growth but also to organizational dynamism and societal advancement.

II. REVIEW OF LITERATURE

The study titled "The Effects of Single-Dominant Organizational Cultures on the Innovativeness of a Firm" (Asaah et al., 2018) investigates how single-dominant cultures within organizations influence their innovativeness. Utilizing hierarchical regression analysis and data collected from 172 financial institutions, the study examines the relationships between clan, adhocracy, market, and hierarchy cultures and product and process innovations. Findings indicate that clan, adhocracy, and market cultures exhibit positive associations with both product and process innovations. The practical implication suggests that managers in commercial firms should aim to cultivate adhocracy or market cultures to attain sustained competitive advantages. Theoretical contributions highlight the importance of externally-oriented organizational cultures in fostering workplace innovation.

The study titled "The Impact of the Effect of Organizational Culture on Employee Innovation Behaviour: The Mediating Role of Value Propositions" (Zhang & Guo, 2023) investigates the relationship between organizational culture, employee innovative behaviour, and value proposition, as well as the mechanisms involved. Findings indicate a strong positive correlation between organizational culture and employee innovation, with organizational culture positively influencing innovation behaviour.

Another study titled "The Mediator Role of Organizational Innovativeness Between Organizational Culture and Organizational Effectiveness" investigates the relationships among organizational culture, organizational innovativeness, and organizational effectiveness within higher education institutions. Using a survey research method, the study sampled 369 full-time faculty members from five branches of Islamic Azad University (IAU), Pars Province, Iran. Employing three questionnaires to measure variables, the findings reveal significant positive correlations between adhocracy culture, market culture, clan culture, organizational innovativeness, and organizational effectiveness. However, hierarchy culture exhibited no significant relationship with either innovativeness or effectiveness.

Another study explores the mediating effect of organizational learning between different types of organizational culture, HRM practices, and innovativeness (Raj & Srivastava, 2013). The data was collected through structured interviews conducted with 321 respondents (convenient sampling), encompassing both the service and manufacturing sectors in government, private, and public organizations. The results of the study reveal a significant mediating role of organizational learning in the relationship between clan, adhocracy, and market culture, HRM practices, and innovativeness.

A study done by Kurian (2015) on “The impact of organisational culture on the innovativeness of IT organizations” investigates the impact of four types of organisational culture (Adhocracy culture, Clan culture, Hierarchy Culture and Market Culture) based on Competing Values Culture Model. The study conducted a cultural audit of eight IT organisations and evaluated their innovativeness. Organizational Culture Assessment Instrument (OCAI) by Kim Cameron and Robert Quinn (2005) and Value Innovation Development Enabler Assessment instrument (Léo F. C. Bruno, 2010) was used in the study. Anova was carried out for data analysis. The findings demonstrated that Adhocracy takes the lead in offering the best working environment for encouraging innovation. Market culture came next. The institutions with hierarchy culture performed the worst.

Similarly, Demirci (2013) in his study “Strategic Representation of an Abstract Reality: Spiralling Relations between Organizational Culture and Innovativeness” found clan culture, adhocracy culture and market culture to be positively correlated with innovativeness. However, hierarchical culture was negative correlated with innovativeness.

Another study assessed the effects of organizational culture and innovativeness on business performance in healthcare industry (Acar & Acar, 2012). 332 employees of 65 private hospitals in Turkey were assessed for the study. The 18-item Likert scales of Wang and Ahmed (2004) and Jansen et. al. (2006) and Organizational Culture Assessment Instrument (OCAI) by Kim Cameron and Robert Quinn (2005) was used in the study. According to the descriptive statistics it is found out that the dominant organizational culture in the Turkish healthcare industry is Hierarchy. It was suggested that health professionals change the organizational culture of their hospitals to the best appropriate type of organizational culture for healthcare industry i.e., Adhocracy.

A study on “What contributes to individual innovativeness? A multilevel perspective” (Aldahdouh et al., 2019) examines a model comprising a mix of psychological factors (implicit theory and goal orientation) and organizational culture. Organizational Culture Assessment Instrument (OCAI) by Kim Cameron and Robert Quinn (2005), Individual Innovativeness Scale(IIS) by Hurt et al. (1977) and Achievement Goal Orientation (AGO) by Midgley and colleagues' (2000).The results suggest that psychological factors reflecting goal orientation are very important in interpreting individual innovativeness. However, departmental culture had neither a direct effect on innovativeness nor a moderation effect on the relationships between the psychological variables and innovativeness.

III. METHODOLOGY

A. Aim

To study the relationship between the different types of organisational culture and Individual Innovativeness among employees working in an MNC.

B. Objectives

• To assess the relationship between different types of organisational culture (Adhocracy, Clan, Hierarchy, and Market) and Individual Innovativeness.
• To identify the culture types that fosters individual innovativeness in an organisation.

C. Hypothesis:

H01- There is no relationship between Adhocracy culture and Individual Innovativeness.

H02-There is no relationship between Clan culture and Individual Innovativeness.

H03-There is no relationship between Hierarchy culture and Individual Innovativeness.

H04-There is no relationship between Market culture and Individual Innovativeness.

D. Variables

• Type of Organizational Culture- Adhocracy Culture, Clan Culture, Hierarchy Culture and Market Culture.
• Individual Innovativeness

E. Operational Definitions

• Organizational Culture- is the collection of observable behaviours, work style and interpersonal interactions that reflect underlying shared values (collaborate, create, control or compete).
• Individual Innovativeness- is the inclination and capacity of an individual to generate and implement original ideas and solutions, demonstrating creativity, problem-solving skills, and a proactive attitude towards change and experimentation.
• Multinational Company- A corporation that operates and conducts business activities in multiple countries simultaneously.

F. Research Design

The study will employ a quantitative research approach to investigate the correlation between different types of organizational culture and individual innovativeness.

G. Sampling Technique

Participants are selected through convenience sampling.

H. Data collection

The data will be collected from 150 employees working in an MNC in India through online google forms. The form contains the demographic details and the two tools used for study.

I. Ethical considerations

• Informed consent will be obtained from all participants prior to participants.
• Participant confidentiality and anonymity will be strictly maintained throughout the study.

J. Tools

Organizational Culture Assessment Instrument (OCAI) by Kim Cameron and Robert Quinn (2005)

The Organizational Culture Assessment Instrument (OCAI), developed by Kim Cameron and Robert Quinn in 2005, is a widely utilized survey tool designed to assess organizational culture according to the Competing Values Framework. This framework identifies four primary culture types: Clan, Market, Adhocracy, and Hierarchy culture, each representing distinct organizational values and behaviours. The OCAI survey consists of six sets of questions, with each set divided among four alternatives corresponding to the four culture types. Participants are asked to indicate their agreement or preference for each alternative, allowing for a comprehensive assessment of the prevailing organizational culture. The scale demonstrates strong statistical significance and reliability, surpassing the standard benchmarks for reliability in psychometric testing. The Cronbach alpha coefficients, a measure of internal consistency, further validate the reliability of the instrument, with coefficients ranging from .71 to .79 across the four culture types.

Individual Innovativeness Scale (IIS) by Hurt et al. (1977)

The Individual Innovativeness Scale (IIS), developed by Hurt et al. in 1977, is a comprehensive assessment tool designed to measure an individual's propensity for innovation and willingness to embrace change. Comprising 20 items, each evaluated on a five-point rating scale, the IIS offers a nuanced exploration of an individual's innovative tendencies across various domains. This scale has garnered widespread recognition for its robust psychometric properties, consistently demonstrating its reliability and validity as a measure of general innovativeness. The scale's internal consistency, as evidenced by a Cronbach's α coefficient of 0.848, further bolsters its credibility and reliability as an assessment tool.

K. Data Analysis

Quantitative data will be analysed using statistical software. Data was analysed using statistical tools including mean and standard deviation. Spearman Correlation was done to understand the relationship between organisational culture types and individual innovativeness. Further, regression analysis was done for the correlated variables.

L. Inclusion Criteria

• Employees working in an MNC.
• Employees working in various departments and job roles.
• Employees at all levels of the organizational hierarchy, including entry-level, mid-level, and senior-level positions was considered.

M. Exclusion Criteria

• Employees not working in an MNC was excluded.
• Employees hired on a temporary or contractual basis, such as interns or seasonal workers, will be excluded.

IV. RESULTS AND DISCUSSION

The descriptive statistics indicated that the skewness of clan culture, hierarchy culture, market culture and innovativeness are greater than +/-1. This indicates the data is skewed. The kurtosis of the variables ranged from 0.830 to 3.130, which also indicates that the data is more heavy-tailed compared to the normal distribution. Therefore, the data was analysed using Spearman Correlation.

1. H01- There is no significant relationship between Adhocracy culture and Individual Innovativeness.

Table 1: Spearman Correlation between Adhocracy Culture and Individual Innovativeness

Table 1 shows the spearman correlation between Adhocracy culture and Individual Innovativeness. For this research sample (n = 150), the correlation coefficient and the significance value are 0.155 and 0.058 respectively (r = 0.155, p = 0.58). Therefore, as p > 0.05, the null hypothesis stating ‘There is no significant relationship between Adhocracy culture and Individual Innovativeness’ is accepted.

2. H02-There is no significant relationship between Clan culture and Individual Innovativeness.

Table 2- Spearman Correlation between Clan Culture and Individual Innovativeness

Table 2 shows the spearman correlation between Clan culture and Individual Innovativeness. For this research sample (n = 150), the correlation coefficient and the significance value are 0.087 and 0.291 respectively (r = 0.087, p = 0.291). Therefore, as p > 0.05, the null hypothesis stating ‘There is no significant relationship between Clan culture and Individual Innovativeness’ is accepted.

3. H03-There is no significant relationship between Hierarchy culture and Individual Innovativeness.

Table 3- Spearman Correlation between Hierarchical Culture and Individual Innovativeness

Table 3 shows the spearman correlation between Hierarchical culture and Individual Innovativeness. For this research sample (n = 150), the correlation coefficient and the significance value are 0.147 and 0.073 respectively (r = 0.147, p = 0.073). Therefore, as p > 0.05, the null hypothesis stating ‘There is no significant relationship between Hierarchical culture and Individual Innovativeness’ is accepted.

4. H04-There is no significant relationship between Market culture and Individual Innovativeness.

Table 4- Spearman Correlation between Market Culture and Individual Innovativeness

*Correlation significant at 0.05 level

Table 4 shows the spearman correlation between Market culture and Individual Innovativeness. For this research sample (n = 150), the correlation coefficient and the significance value are 0.171 and 0.037 respectively (r = 0.171, p = 0.037). Therefore, as p < 0.05, the null hypothesis stating ‘There is no significant relationship between Market culture and Individual Innovativeness’ is rejected. Therefore, the alternate hypothesis stating ‘There is a significant relationship between Market culture and Individual Innovativeness’.

Table 5- Simple Linear Regression to assess the influence of Market Culture on Individual Innovativeness

Criterion Variable: Individual Innovativeness

Table 5 shows the results of Simple Linear Regression to assess the influence of Market Culture on Individual Innovativeness. The result reveals a significant f-value (f = 14.045, p < 0.05), indicating that market culture is a robust predictor of innovativeness. Furthermore, the R-squared value of 0.080 indicates that market culture accounts for 8% of the variance in innovativeness scores, highlighting its substantial influence. The beta coefficient (β = 0.294, p < 0.05) confirms that for every unit increase in market culture, there is a corresponding increase in innovativeness.

In line with this result, previous study found that there is a positive correlation between market culture and organizational innovativeness and effectiveness (Raj & Srivastava, 2013). Another study found that Market Culture fosters a good environment for innovation after Adhocracy culture (Kurien,2015). The same was found in another study where Adhocracy culture fosters innovation strategy (Naranjo-Valencia et al., 2016). Asaah et al. (2018) suggests that managers in commercial firms should aim to cultivate adhocracy or market cultures to attain sustained competitive advantages.

There are various arguments both in support of and against market culture being a predictor of innovativeness. Scholars have noted that the outward focus of a market culture fosters innovation by facilitating the introduction of new ideas and reaching out to markets where the company understands the customer needs. Conversely, some studies suggest that excessive emphasis on meeting current customer demands may impede certain types of innovation (Baker & Sinkula, 2002).

According to Hofstede (1980), organizational culture influences employee behavior and attitudes, shaping their responses to organizational goals and challenges. Market culture, characterized by competitiveness and a focus on results, aligns with the findings of previous studies suggesting that competitive environments stimulate individual innovation (Scott & Bruce, 1994). Scott and Bruce (1994) found that organizations fostering a competitive culture tend to encourage risk-taking and creativity among employees, leading to higher levels of individual innovativeness. Conversely, Clan culture, which emphasizes cohesion and loyalty, may inhibit individual innovativeness as it prioritizes stability and tradition over experimentation (Schein, 1990). This aligns with Schein's (1990) argument that Clan cultures tend to stifle innovation due to their emphasis on conformity and risk aversion. Similarly, Adhocracy culture, while promoting adaptability and innovation (Cameron & Quinn, 2011), may not necessarily translate into higher levels of individual innovativeness if organizational structures or processes hinder autonomy or discourage initiative (O'Reilly et al., 1991). Additionally, Hierarchy culture, characterized by formalized procedures and centralized decision-making, may limit individual creativity and innovation due to its emphasis on adherence to established norms and procedures (Cameron & Quinn, 2011). These insights underscore the importance of considering the unique characteristics of different organizational cultures in understanding their impact on individual innovativeness, with Market Culture standing out for its propensity to stimulate innovation through competitive dynamics (Scott & Bruce, 1994).

V. LIMITATIONS

One limitation of the study is the use of convenience sampling, which may introduce bias into the results and limit the generalizability of findings. Additionally, reliance on self-report measures for assessing organizational culture and individual innovativeness may lead to response bias and affect the reliability of the study's findings. Furthermore, the cross-sectional nature of the research design hinders establishing causality between Market culture and individual innovativeness, limiting the depth of insight provided by the study.

VI. IMPLICATIONS

Organizations having a market-oriented culture foster innovation among their employees. By promoting a culture that emphasizes customer focus, competitive pressure, risk-taking, adaptability, entrepreneurship, performance orientation, and continuous improvement, organizations can empower employees to unleash their creative potential, drive innovation, and maintain a competitive edge in the dynamic marketplace.

Conclusion

Market culture was found to have a significant relationship with Individual Innovativeness. It was also found that Market Culture has significant influence on Individual Innovativeness. Therefore, we can conclude that Market culture may foster innovation among employees working in an MNC. The findings of this study underscore the significance of Market culture in fostering individual innovativeness among employees within multinational corporations (MNCs). Specifically, the significant relationship observed between Market culture and Individual Innovativeness suggests that organizations emphasizing market-oriented values may be better positioned to stimulate innovation among their workforce. As such, it is evident that cultivating a Market culture within MNCs can serve as a catalyst for promoting a culture of innovation, thereby enhancing organizational adaptability and competitiveness in dynamic market environments.

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Copyright

Copyright © 2024 Sharon Susan Jiji, Dr. Venugopal N. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.