International Journal of Advanced Engineering and Management Research

Vol. 2 Issue 6, 2017

http://ijaemr.com/ ISSN: 2456-3676

THE ORGANIZATIONAL CULTURE AS A SUPPORT OF INNOVATION

PROCESSES

Ioana Ceausu 1, Raphaël Murswieck2 Bastian L. Kurth3and Razvan Ionescu4

1
The Bucharest University of Economic Studies, Romania
2
The Bucharest University of Economic Studies, Romania
3
The Bucharest University of Economic Studies, Romania
4
The Bucharest University of Economic Studies, Romania

ABSTRACT

The global economy is in continuous dynamic and evolution, thus the companies need to keep up
with these changes. They need to adapt to shorter production cycles and create new products,
structures and processes accordingly. This paper examines the scientific literature related to
organizational culture and its influence on innovation performance. Literature reveals that
research on organizational culture largely confirms existing concepts and models, and it supports
the achievement of the profile for an innovation culture. The research identifies organization
culture as a promoter of innovation. This culture can be transformed into an innovation culture,
used by managers to improve the cultural environment in order to enhance the performance of
their company.
Key Words: organizational culture, innovation processes, creativity
1. INTRODUCTION
Innovation is a topic addressed in the large-scale scientific literature currently (Maier,
2014;Sandru, 2014; Maier A.,2012, Maier A. 2014;Olaru, 2013;) and defined by both
practitioners and researchers, because of its relevance in increasing success and company
survival. Innovation means both "making a change, introducing a novelty into a domain, in a
system" and "novelty, change, transformation" (Popescu, 2016).

Managing innovation is an important process that only a few companies master very well. The
main reason for this is that the innovation process is not fully understood or implemented by
organizations, because of the lack of maturity of the innovation culture (Maier, 2013). Many

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researchers indicate that culture can be seen as a competitive advantage of the organizations.
(Lam, 2010;McLean,2005;O’Donnell, 2008; Fiol, 2011).

2. INNOVATION AND ORGANIZATIONAL CULTURE

A. Innovation
The ability to innovate is one of the key factors in the competitiveness of any company. But what
does innovation mean? The scientific literature provides many definitions for innovation, very
similar, described only with different words.

Innovation can be defined as the identification of opportunities to create new products, services
or processes (Maier, 2016);it is a process of transforming ideas and the opportunity to put these
ideas into practice; it is a planned, rational process; it is an evolutionary process, non-linear and
interactive, which requires intensive communication and collaboration between different actors
(Aouad, 2010). Innovation creates added value for customers and business (Maier, 2016a,
Vadastreanu, 2015). Innovation is both what you do (product, service, etc.) and how you do it
(value chain, strategy, etc.) (Losane, 2013). In its current meaning, the term "innovation" defines
the successful implementation of a new idea. The realization of innovation must be seen in a
broad sense, in connection with the creative processes that aim to find new solutions and
materialize them in various forms (Popescu, 2016). This process combines the ability to identify
challenges (vision) with the ability of finding new solutions (invention) that add value to both the
customer/user and society (Bayó, 2015).

Some authors make a very close link between creativity and innovation. Creativity is not the
same as innovation; it is the first step towards innovation (Maier, 2013a). There are always two
features for creativity - novelty and utility, both of which are involved in the resulting product or
service, which is new and original and appropriate at the same time (Sternberg, 1999). The result
of creativity is just an idea that may or may not be implemented (Gandotra, 2010), but innovation
is the process that drives this idea from the first moment to the result - a new value for the client
(McLean, 2005).

Figure 1 The innovation process (made after Paradis, 2010)

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Innovating today will be easier to innovate than tomorrow (McLean, 2005; Vadastreanu, 2015 b;
Maier, 2013). The attention of many top executives is largely focused on the urgent problems of
day-to-day management, innovation is often left aside, although it is considered an important
issue, and it does not have the same priority as other pressing issues. When a leadership team
becomes aware of the need for innovation, they identify a series of challenges that they have to
face. These reflections usually address issues such as:
- The need to protect innovation from potential threats that could prevent society from renewing.
- To be credible, innovation must produce consistent results. It cannot be a fortifiable
contribution once. Innovation must become continous and deeply rooted by settling itself in
organizational culture.
- To come up with new ideas, one requires a certain attitude (great thinking, observing more
possibilities than problems, etc.), which in many cases is exactly the opposite of how people
have been taught to think in a corporate context.

Every innovation starts from the idea of changing something, doing better. There are many types
of innovation. Schumpeter (Schumpeter, 2003) and Jones (2011) identified them a long time ago
(new production methods, new products, new forms of organization, new sources of supply, new
markets) All innovations require certain changes: changes in technology, changes in supply
methods, changes in structures. The focus on innovation is one of the distinctive elements of
strategies and policies implemented over the last quarter of a century, both within organizations
and at national and regional level. This focus requires the approach of R&D activities in
connection with the business environment and other societal structures, that have to apply the
new solutions, with the aim of gaining benefits for organizations, for society and for people
(Popescu, 2016).

In the first half of the last century, Austrian economist Joseph Schumpeter distinguished five
types of innovations: manufacturing new products, introducing new production methods,
opening new outlets, and creating a new form of organization, discovering new sources of raw
materials (Croitoru, 2008; Maier, 2013c).

This vision of innovation does not differ very much from the classification of innovation
according to the nature of the phenomena it refers to, adopted by the Organization for Economic
Co-operation and Development (OECD), which differentiates the following four categories (***,
2005):
o product innovation – the creation of a new or improved product in terms of technical-
functional characteristics, components, materials, ease of use or other functional
features(***, 2005);
o process innovation – the development of a new or improved production or delivery
technology in terms of working methods and equipment (***, 2005);
o marketing innovation – the introduction of a new marketing method, a relevant change
in the appearance, packaging, distribution or promotion of the product (***, 2005) ;

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 o organizational innovation–the implementation of new organizational and management
methods, with effects on the business process and the company's external relations(***,
2005) .
The last category includes management innovation, which appears as a distinct category in some
classifications (Hamel, 2006).

Another criterion for classifying innovation is the novelty of the applied solutions, distinguishing
two major categories: incremental innovation and radical innovation.
o Incremental innovation consists of improvements brought to existing products and
processes, incentives for introducing the new market-pull model. For example, in
computer science, the power of microprocessors and the size of memory have doubled
every two years since 1985, and in the automotive sector between the '50s and' 80s,
continuous performance improvement has been achieved with classic engines without
modifies their constructive conception.
o Breakthrough innovation refers to the introduction of completely new technology push-
based solutions. The emergence of radio, television, computers, are just some illustrative
examples. These products did not come in response to market needs, because before they
were introduced on the market, there were no perceived needs that new products could
solve. In these cases, new technologies generate needs that did not exist before.

Innovation is the new frontier for quality, on which the adaptation of organizations to new
requirementsdepends, including the concern for achieving excellence and the sustainable
existence of the organization (Popescu, 2016).

Whatever the situation, these are just some of the many definitions that describe innovation.
However, what really matters is the company’s own definition. In other words, each company
must define what it understands through innovation, so that everyone in the organization has the
same understanding of the concept (Bayó, 2015)
Some aspects, such as the following, should be taken into account in establishing the definition:
1. Innovation is a process and therefore it should be managed as a process.
2. The process of innovation is completely inseparable from strategy.
3. The goal is to provide the market with solutions that add value both to customers and to the
company.
4. Innovation involves risk.
5. Innovation does not just involve the R&D or technology department.
6. Innovating (process) ≠ Innovation (result).
7. Innovation ≠ Creativity, Research.
8. Types and levels of innovation.
9. Innovation is a collaborative process.
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10. The degree of innovation is directly proportional to the capacities for generating, developing
and managing innovation projects.

B. Organizational culture
Organizational structure refers to the way that managers implementing and monitoring the
management of innovation are organized. Organizational structure can take various forms
depending on the size of the company, its innovation policy (centralized or decentralized), the
innovation strategy and objectives, its focus (research-driven or user-driven) or its organizational
nature, among other things. Each company should generate its own structure.

Ideally it should involve the entire organization, even though this is not always possible or
feasible. Even if everyone takes part in the innovation process in some way or another, some
people will nevertheless be more involved and have greater responsibility (Bayó, 2015).

Focusing on organizational culture emerged as theory and practice in the 1980s. Organizational
culture is a social variable and it defines the distinctive way in which people perform their tasks,
treat clients, solve problems and conflicts, etc. Simply defined, organizational culture is the
"lifestyle of an organization" and is found to be mainly expressed in behavioral patterns of
employees (Dauber, 2012). Organizational culture is what gives personality and identity to an
organization. Each organization has its own culture, synthesized in the values, beliefs, beliefs
and aspirations shared by members of the organization.

The approach of the organization, from this perspective, helps to understand the different impact
and difficulties in organizational change. Studies show that failure to implement modern
management systems or other change projects has occurred in most cases due to the lack of
alignment of the organization's culture with the new values and principles. When the assumed
values and employee behaviors remain constant, resolutions are often formal, even if the
structures and working procedures have been modified. These do not lead to the expected results;
on the contrary, they often produce frustration, loss of confidence and employee morale, and the
organization may get worse than before the change projects (O'Donnell, 2008).

A common belief of organizations is that the organization culture is one of the most important
factor of competitiveness. Although it can be quite difficult to replace certain individuals, and
relatively easy to imitate products and processes, organizational culture is unique and persists
over time - not everyone can create it. Those companies, whose employees are open to new ideas
and are prepared to actively participate in technological change by being creative and showing an
initiative, usually, have a greater potential for innovation. However, an organizational culture
does not consist only of people. The systems, procedures, and organizational structure make
individuals interact in a certain way (Terréi, 2002; Bodemann, 2015).

The culture of innovation is the ability of the organization to define, implement and develop new
products, regular processes, making them the daily life of organizations. Innovation itself does
not last long, but the advantage of systematic innovation capacity can take a long time (***,

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2012). To gain this advantage, the company needs to create an innovation culture. Organizational
culture counts enormously in innovation. The analysis of the characteristics of successful firms
shows that they have developed organizational cultures where innovation is seen as the
responsibility of everyone and as an objective that employees at all levels try to do in their day-
to-day work (Bolton, 2013).

All innovative companies should become intelligent organizations, meaning that companies that
learn to learn and know how to use mistakes and unsuccessful projects to come back and
continue to improve are more successful (Terrei, 2002; Maier D. 2014).

Summing up studies on the culture of innovation (Losane, 2013), the culture of innovation is
defined by reference to the five determinants shown in Figure 2:

Figure 2. Determinants of organizational culture (authors ‘own contribution)

 Values: freedom, risk taking, trust, openness, creativity, flexibility, lifelong learning;
 Strategy: innovation as a strategic goal, strong customer identification, future orientation;
 Structure: autonomy, flexibility, collaborative teams and group interaction, transparency;
 Behavior and communication: support, tolerance of mistakes; opening up new ideas; the
ability to adopt new ideas; rapid adaptation to market changes; trust relationships;
emphasis on key competences;

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  Leadership: Focus on innovation management and modeling behavior that encourages
innovation, such as risk-taking, innovation support and rewarding initiatives (Losane,
2013) Leadership emphasizes the decisive role of higher management in delivering
innovation by setting direction and engaging people to achieving the goals of change. In
this sense, it is essential to develop an innovation strategy and create an organizational
culture that encourages innovation across the organization (Popescu, 2016)
In the opinion of the specialists, the leading role of the leader in innovation is to create a culture
in which innovation and creativity are found in everyone's work. Innovation requires the
declared commitment of higher management, supported by the allocation of resources and
incentives. These signals of opening up to innovation must reach all employees. The
communication method is another key factor in conducting leadership and creating a culture
conducive to innovation.

Organizations need broad information dissemination processes to reduce innovation uncertainty

and the changes it produces. At the same time, good communication favors the expansion of
participation in the innovation process. The defining values of the company are essential tools of
leadership in modern management. Values determine priorities and decisions, which are
reflected in the way a company spends its time and money. The values of a company are not
what the leaders say or what they write in promotional materials and reports, but what people,
leaders and employees do. Really innovative organizations provide the resources needed to
support entrepreneurial action, stimulate creativity and learn.

Behaviors describe how people act in terms of innovation. For leaders, these actions include the
description of the future through strategies and plans and the energizing of employees to achieve
defined goals. For employees, innovation actions include participation in innovation by finding
solutions or engaging in projects, perseverance in overcoming technical barriers, negotiating
resources, listening to customers, etc. (Losane, 2013, Olaru, 2016).

Organizational culture is considered in the literature as one of the factors that can stimulate
innovative behavior among members of the organization. Because it influences employee
behavior, it can lead to the acceptance of innovation as a fundamental value by the organization.
Leaders must promote the innovation of an organizational culture within the organization, being
personally involved in setting and implementing clear and relevant methods to support
innovation. Leadership is particularly important in the context of innovation, both the nature of
innovation and the plan to achieve this goal need to be communicated clearly and repeatedly.
Leaders need to have a vision of innovation and be able to share it (Maier, 2013).

An important feature of the organizational culture of high performance companies in innovation

is the cultivation of a smart climate of risk taking and learning from failures instead of
sanctioning mistakes.

Organizational culture differs from climate in the respect that culture is based on beliefs that are
shared organization-wide, while climate is based on what an individual senses in and about the
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organizational environment. In effect, climate emerges from aspects of the organizational context
that individual employees perceive to be important and influential in their work. Because of this,
climate is seen as a more salient feature of an organization to the degree that different beliefs,
meanings, and symbols (i.e., culture) give rise to individual expectations, perceptions, and
interpretations of the organizational environment that have a main effect on behavior (Bates,
2005).

Maher (2014) has identified seven key dimensions of culture that distinguish highly innovative
organizations (Figure 3). These form a framework which leaders can use to assess and strengthen
the culture for innovation within and across organizations:

- employees should have a sense that they can try out new ideas without fear that an ill-
advised idea will entail negative consequences; leaders of innovative organizations
should be more interested in learning “by mistakes” rather than punishing employees for
ill-advised ideas – it is better when mistakes are made when an idea is implemented,
rather than when there are no mistakes because there are no ideas;
- a positive approach to innovation is greater if employees know that they have the support
of superiors and independence in action while they develop innovative ideas, as well as
that they can make use of financial resources to support the innovation processes;
- knowledge is the primary resource for innovation; one can create better conditions for
innovation, where information from both inside and outside the organization is widely
and systematically collected, easily and quickly accessible and clearly communicated;
- as the relevant literature shows, objectives may actually promote innovation; leaders of
the organization should give a clear signal that innovation is highly desirable, by setting
ambitious goals in different areas and establishing motivated teams to find ways to
implement the vision;
- the support for innovation lies within symbols and rituals, whose main objective is to
identify innovative behavior; an incentive for this type of behavior are symbols and
rituals, that refer to internal and individualized motivation of individual employees;
- in organizations with high innovation-based effectiveness, innovation is a product of the
intended use of practical tools; leaders must consider how to build potential and
capability in employees that are aware of methods of creative thinking, management and
implementation of ideas;
- a dimension of the relationship, which refers to the models of interaction within the
organization; innovative ideas are rarely the product of a lone genius, therefore building a
collaborative environment, accepting different ways of thinking, different viewpoints and
diversity provide a good basis for the growth of innovation.

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 Figure 3. Dimensions of innovation culture (Szczepańska-Woszczyna, 2014)

A strong organizational culture could be a major barrier in implementing change, because if a

strategic orientation of the enterprise focuses on innovation, a certain level of non-compliance
with individual and organizational values is required (Stacho, 2017).

Conclusions

There are several conclusions that can be observed in studying the aspects related to the
organization culture. As a starting idea we can consider that the added value of an organization is
given by its employees and their collective capacity. Vision, strategy, marketing, financial
management - any management system, in fact, can be set on the right path and can be achieved
after a while. The long-term success of an organization can be achieved only if these values are
part of its culture. Nowadays, managers increasingly see the need to harmonize organizational
culture with the organization's strategic goals. The culture of any organization is the expression
of its functioning as a system, and an innovation culture cannot be artificially graded into a
company where anti-innovation rules, regulations, procedures and attitudes prevail. Innovation
depends on people, on their ability to generate knowledge and ideas and to apply these to their
workplace and society. The development of a culture conducive to innovation is a complex
process and is carried out in parallel with the implementation of adequate, open-minded
structures and new innovation management tools.

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